Do you have bad credit? Are you struggling with applying for financing? If so, then you're not alone. Thousands of people are suffering from bad credit and inablity to apply for credit every day, and it's brutal. If you're one of them, there's nothing you should worry about. There are several types of financing that you can go for, even though you have poor credit.
These are what we call bad credit loans that can help people who need financing. Now don't be confused about why you can't see bad credit loans often, as this term is just an umbrella term for any type of financing that offers to finance people with bad credit. With that said, here are some types of financing that you can go for if you have bad credit.
Secured Loans
A secured loan is an umbrella term for any type of loan secured by collateral. With a secured loan, you'll have to offer a valuable possession that you can offer your lender as an asset, like a deed to land, home, car, or even jewelry. Because these types of loans require collateral, they are typically easy to approve. This is because the risk is low for the lender.
If you default, they will seize the collateral to be sold to pay off your loan. That said, if you have a valuable possession you can choose to have as collateral for a loan, you should go for a secured loan from a bad credit lender. However, remember that if you aren't able to pay for that loan, your collateral will be seized.
Payday Loans
Payday loans often have a bad reputation due to their exorbitant interest rates, so many people avoid them. However, that often stems from the borrowers not reading the fine print and being irresponsible with their repayments.
So what are payday loans? Payday loans offer short-term financing solutions to people with poor credit. The best thing about payday loans is that they typically require no credit check, and you can see them in your bank account as fast as within the week. Probably the only con about payday loans is that their interest rates could often be as far as three-digit percentages.
Cash Advances
If you have a credit card but are afraid to rack up more debt by using it, you can go for a cash advance from your credit limit. A cash advance lets you pull funds from your credit card as cash from any ATM near you. Usually, you only need your PIN to get a cash advance from an ATM.
The amount you then borrowed will be rolled into your outstanding balance on your credit card. However, you'll likely pay a higher interest rate because of the cash advance. But if you don't have access to a nearby ATM, you can directly go to your nearby bank and get a cash advance personally.
Joint Personal Loan
If your credit score isn't high enough to get you approved by a lender or a bank, you should consider getting support from a loved one or a friend and filing a joint personal loan. This enables you to get a loan from another person. So, how does this work? It mostly works like a regular personal loan. The only difference is that the responsibility of repaying doesn't only lie on you but also on the other person.
If you can't repay the loan, you can have the other person pay for it. That said, you have to have the other person's full support and ensure that you have a good relationship with them since you can have a conflict with them regarding financing.
Home Equity Loans
If you have bad credit, one thing you could do is to borrow a loan from your home equity. Known as a home equity loan, this type allows you to get a loan from the equity you have built on your home over the years. It works just like a personal loan, which gives you a lump sum if approved.
However, before you can get approved, the lender would appraise your house based on its current price on the housing market. Once they determine its price, they will offer you a percentage of its price as a loan. But of course, there are cons to home equity loans. If you cannot repay the loan, there's a huge chance that the lender will seize your house to be sold off to the market to pay off your loan.
Final Words
You're not alone if you're struggling with a bad credit score. However, there are several types of finances you can go for if you have bad credit. These financings have pros and cons, so you should research them before you go for one. Until then, you should pick the most suitable for your financial situation.
* This is a contributed article and this content does not necessarily represent the views of sciencetimes.com
