Low credit score loans are a means of borrowing money when an individual has an adverse credit history. It is possible to get a secured loan on an item of value or get a quick cash advance without being required to provide any collateral.
Low Credit Score Loans
The overwhelming majority of bad credit homeowner loans involve a credit check. However, a quick cash advance, such as a cobra payday loan, can be provided on the same day without this requirement. The risk faced by adverse credit lenders will be reflected in the monthly repayments.
Interest Rate When Borrowing Money
An unsecured loan for poor credit will attract a higher rate of interest than a loan that is secured on a house, car or other item of value. The default rate faced by a bad credit lender is a lot higher. The interest rate charged will reflect the risk; the provision of collateral helps to reduce this.
Whilst a quick cash advance can help someone out of a short-term financial hole, the interest rates on such loans are often usury. Payday loans regularly attract an APR of upwards of 1000%. Consider carefully how paying $15 to $20 on every $100 borrowed will affect family finances the month after.
FICO Credit Scores
A poor credit history needn’t last indefinitely. Making timely repayments on loans, mortgages and bad credit cards will help to improve a FICO credit score in upwards of 6 months. Bank loans for bad credit should be refinanced at a later date as more competitive deals will be available.
Where to Get a Low Credit Score Loan
- Pawnbrokers. Those who wish to borrow money need to provide the pawnbroker with an item of value (such as gold, jewelry or electrical equipment). Interest rates are typically about 80% APR.
- Payday loan lenders. Provide a quick cash advance without the need for a credit check. Applicants will need to be U.S. citizens, in full-time employment and be able to provide identification.
- Credit Unions. A non-profit organization that lends money to their members at an affordable rate.
- Prosper.com. This is a peer-to-peer lender where people lend money to each other through a bidding interface. It is possible to apply for $25,000 unsecured loans for poor credit.
- Logbook loans. Bad credit lenders offer loans to customers based upon the value of their car. It is necessary that the vehicle is fully owned by the individual and not in a live hire purchase agreement. The car doesn’t legally belong to someone until the final repayment is made.
Whilst low credit score loans can help someone out of a short-term financial hole, they can also be a source of further financial difficulties. It is important that anyone who is considering one is in a position to make repayment as interest can and will accumulate quickly.
Millions of U.S. citizens are excluded from mainstream borrowing sources due to missed or late payments on past and existing credit agreements. Some adverse credit entries will show on credit reports for as long as 10 years. Finding a bad credit lender who is prepared to offer guaranteed online personal loans can present a challenge when struggling with urgent money problems, but they are available.
Where to Get Bad Credit History Unsecured Loans
Whilst borrowing sources aren’t as well advertised as secured bad credit bank loans for homeowners, it is relatively easy get a bad credit history unsecured loan. The most readily accessible borrowing sources are credit union loans and same day Payday loans. It is important to note that the greater risk posed to the lender means that a higher APR will be charged. Failure to pay this back promptly will mean that personal debt will quickly escalate.
Credit Union Loans
Individuals join a Credit Union on the basis of a shared common interest. Whilst the most common reasons for membership are locality and employment, it is possible to join on the basis of being related to someone who is already a member. For example, being related to a teacher who is a member.
Credit Unions aren’t traditional bad credit lenders in the way that same day Payday loan providers are. Whilst they offer bad credit history unsecured loans, they lend on the basis of a careful assessment of whether it is in the best financial interests of the member. They are a non-profit organization that works for its members.
The interest rate on Credit Union loans is very favorable so it should be someone’s first choice bad credit lender. Whilst it in no way provides a fast loan, it offers an affordable way to borrow money. If someone encounters financial difficulties, a Credit Union will sympathetically work with the debtor to overcome any problems.
Same Day Payday Loans
This can be a guaranteed online personal loan provided that the applicant has access to a FAX machine. However, it is also readily available at many high street outlets. The criteria are as follows:
- A U.S. citizen.
- At least 18 years of age.
- A full-time job.
- 2 forms of identification, including at least one form of photo ID.
- A valid checking account.
Provided that an applicant is able to comply with the above criteria, they are guaranteed to be accepted for a bad credit history unsecured loan. The rate of APR is typically 300-400%, although this can vary considerably between providers.
According to an article in the LA Times: “A $255 loan typically carries a $45 fee from a payday lender; if the same amount were charged to a credit card and paid off a month later, the cost would be about $4.” In short, this is an expensive way to borrow money which is why the term of the loan is just a month.
The borrower will need to provide the same day Payday loan provider with a postdated check for the full amount and a 15% premium. This check will clear to coincide with payday.
Bad credit history unsecured loans are available from same day Payday loan providers and Credit Unions. Whilst the latter will offer a vastly more favorable rate and a longer repayment term, Payday loans are available at far shorter notice. Avoid guaranteed online personal loans for frivolous purchases; they should only be taken out in an absolute emergency, such as paying the rent or mortgage.
An instant payday loan becomes necessary when an individual has missed or made late payments on one or more credit agreements. Creditors will report any indiscretions to the leading credit reference agencies (Experian, Equifax and TransUnion) which can mean that a number of borrowers are no longer eligible for mainstream lending products. A bad credit rating loan is a source of short-term borrowing for an individual seeking to avoid credit scoring. It is possible to renew the loan at the end of the term, but it isn’t a recommended long-term loan.
Instant Payday Loan Eligibility Criteria
As already alluded to above, eligibility for payday cash loans isn’t a result of credit scoring. The decision will be based on a simple checklist rather than the individual’s repayment history. The borrower should be a U.S. citizen, at least 18 years old, have a full-time job, a valid checking account and be able to provide two forms of photo identification. Comply with these criteria and a bad credit rating loan is guaranteed for all applicants.
How Payday Cash Loans Work
The borrower provides a post-dated check (equivalent to the principal and any accumulated interest) which coincides with the date the individual is paid. The cost of borrowing is normally $20 to $25 per month for each $100. Although the loan will only last for a full calendar month, those who qualify will be able to borrow money with bad credit in just 15 to 20 minutes. The application process is very straight-forward.
Instant Payday Loans and Affordability
A very bad credit loan without credit scoring will always be more expensive than a conventional loan. No bank will offer an unsecured small loan as it would be deemed too great a risk. Consequently, a customer who wishes to borrow $500 will repay about $600 to $625 just 30 days later. Anyone who borrows money at this rate of interest must have a way of bridging the monetary shortfall (via a bonus or by working over-time) the month afterwards.
Alternatives to Adverse Credit Loans
Whilst an instant payday loan could provide the answer to a short-term borrowing need, they aren’t suitable for everyone. Those who are not in full-time employment will be rejected, but may be able to get a pawn shop loan if able to provide suitable collateral. A very bad credit loan is not appropriate for debt consolidation. However, those who are struggling to keep-up with repayments on various unsecured credit obligations may be able to clear debt with debt settlement program or debt management plan.
Once you’ve finished studying, your student loan payments begin, and you may find yourself in economic trouble. There is no financial aid for paying back student loans, so what can you do to make your payments?
While there is no financial aid available for student loan payments, the government and private lenders can help accommodate your loan payment in other ways.
There are ways to hold off on consolidating your student loans if you’re having temporary financial problems. Payment of Stafford student loans can be deferred, as can some private loans, and you can also forbear payment at the lender’s discretion. Deferments are granted if you decide to keep studying, if you are unemployed, or due to economic hardship.
Deferment allows you to pay just the interest on your loan, or pay nothing during the deferment period and add the interest to the capital, later paying interest on an amount which includes the interest accumulated. If you have a need-based subsidized federal loan, if your financial situation allows you to defer your loan you will not have to pay interest. This is similar to a form of financial aid during the loan repayment period.
Forbearance of a loan generally gives you a twelve-month respite in loan payment during which interest will always accumulate. Lenders will only allow forbearance in extreme cases, if ever.
The consequences of defaulting on a student loan can include money being taken directly from your paycheck, tax returns being withheld, and you will be ineligible for further financial aid or certain social security services. If you have a professional license, it can be suspended until payments are met or revoked.
Before defaulting on a loan, consider consolidation. Private lenders and the Department of Education offer consolidation loans to extend your payment plan and lower your monthly expenses.
Consolidation is a good way to reduce your current financial burden due to student loan debts, and consolidation gives you access to different payment plans. You can switch between these plans to meet your financial needs.
Consolidated loans will generally have a higher total payment, but it will be spread over time with low monthly payments for up to about 30 years. You can opt for a shorter-term plan with higher monthly payments if your financial situation permits. Graduated plans offer lower payments now and periodic payment increases, giving you a chance to change your economic situation.
Income-based plans allow you to pay off your debt as you can; your income, household size, and expenses are taken into account when determining your payment. If you are below the poverty line, you do not have to pay. This is the only way to end up paying less than your overall loan in the end, but the downside is that you will have to make up for lost time with a certain percentage of your income if your financial situation ever improves.
Private lenders and the Department of Education do what they can to make it possible to pay back your student loans, although financial aid for paying back student loans does not exist.