People with a bad credit history often face dire consequences financially especially when they apply for a loan and get turned down by a bank or a credit union. The situation becomes even worse when they have to pay higher interest rates and have very few options left for debt repayment. Bad credit loans are designed for such people who might be responsible citizens but somehow they face a low credit score because of a missed payment or not returning a book to the library. Even if there is no need for debt consolidation, such a person eventually needs to apply for a loan to buy a car or a home, get into college, plan a wedding, or pay off hospital bills for an unexpected illness.
Bad credit loans are divided into two main types:
Secured bad credit loans
Unsecured bad credit loans
Both these types have their own pros and cons but usually secured bad credit loans are preferred by a majority of people. A secured loan requires some sort of an asset to be used against the loan amount in order to secure it. This is due to the poor credit history of the borrower since there is risk involved in these types of loans and the lender needs a way to make sure the person would be able to return the loan along with interest.
One type of a secured loan is known as logbook loan, which takes your car as security. It is possible to borrow up to £50,000 using this approach even if you have a poor credit score. Some companies are offering same day loans by offering this technique to the borrowers. These companies can be approached online and the procedure is as simple as filling out a form. Usually there are three steps involved in this process: apply online, speak to a lender, and receive money in your bank account.
The other type of a bad credit loan is known as unsecured loan. In this type, no equity is required to secure a loan but the borrower usually has to pay much higher interest rates. There are many subcategories of these loans, such as personal loans, business loans, car insurance, and debt consolidation. Again there are online firms that offer unsecured loans by cooperating with a number of lenders who are willing to provide short-term loans to people with a poor credit history. These online companies offer safe and secure ways of getting a loan when all other options fail. The process is easy and straight forward, there are no documents required, the approval time is usually 24 hours to 3 to 5 business days, and maximum faxing can be achieved. Moreover, you get funds instantly in your bank account through electronic money transfer.
Imagine getting into financial trouble when an unforeseen event takes place and you have to pay some emergency bills. You can apply for a payday loan when such a situation arises, which gives to access to the amount you need in just a matter of hours. These types of loans are also unsecured and they have to be paid back in full along with interest in a two week period. Because of this reason, they are known as payday loans. When a person receives his next paycheck, he is able to pay back the loan. For this type, a person needs to be above 18 years of age having a decent monthly salary.
Since people with poor credit are known as high-risk borrowers, banks and credit unions usually turn them down. There are other companies, however, that offer help to these individuals so that they would be able to secure a loan and pay off their debts and at the same time improve their credit score by making payments on time. It is in fact recommended to go for a loan when you have a less-than-perfect credit score so that there is an opportunity to improve your credit score and make your financial future more secure. There are many options that can be used in this regard but make sure you get your hands on the best and most suitable option to avoid further financial troubles and be able to achieve the benefits of getting a bad credit loan.