Do you need money urgently? Applying for a loan would be an ideal solution for it. Your credit score is an essential component when you want a car or personal loan approved. Lenders use this score to determine your ability to pay back your money. The scores range from 300 to 850 where those between 300 and 630 are considered low credit scores while those higher than 630 are high, meaning that they are more likely to pay their loans. Borrowers with low credit scores are considered high-risk and may find it difficult to obtain personal loans, and if they do, they get them at high-interest rates. It does not mean borrowers with lousy credit scores can’t access loans. On the contrary, some institutions offer bad credit loans. What is bad credit loan features? They include the following.
Credit Unions
As a bad credit loan features: “Community-based credit unions” or “those affiliated with your employer” are willing to offer a personal loan regardless of your credit history. The union uses other factors like your character and promise to make payment to advance the loan. Additionally, borrowers with bad credit are not charged a higher interest as it is capped at 18% compared to banks, which charge 36% or higher. This vast difference helps borrowers save and improve their credit score over time.
Apply for No Credit Check Loans
Lenders offering this kind of loan do not conduct a credit check, hence a great way to apply for a loan with bad credit. Payday lenders are the most common institutions that offer no credit check loans. They profit from the borrower’s inability to make timely payment by charging additional fees. No credit check loans charge high-interest rates and borrowers are required to pay within relatively short periods like 2-4 weeks.
Look for a Co-Signer
In this case, the lender sets the terms of the loan based on the credit score of the co-signer (deemed to have a better credit score). As such, he is liable to loan payments in case the borrower defaults. The payment information is recorded on the applicant’s and co-signer’s credit report.
Consider Peer-to-Peer Lending
It is an online platform that advances loans directly from an investor or a group of investors. The borrowers provide a loan listing on different peer-to-peer websites, showing the amount they need and its use. The investors review the applications and select applicants they wish to give loans. Your credit score plays an integral role; however, since individual investors don’t follow stringent loan policies as lending institutions, they have the freedom to offer loans for people with bad credit. What’s more, these bad credit loans come with low-interest rates.
Take Advantage of Your Home Equity
Lending institutions offer home equity loans regardless of your credit score. Your property is used as collateral hence the low-interest rate. You want to consider a home equity loan if you’re looking to apply for a loan that offers affordable loan terms.
