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Acquiring Bad Credit Loans

Author : Rubel Zaman

Bad financial planning, bad credit ratings, sudden emergency, or even the economic downturn: these are all factors that may leave a person with no alternative but to seek a loan in a hurry. At such times normal credit lines and lending channels are virtually closed. Bad credit loans are the only alternatives that will work for such situations. A person may develop a bad credit rating which, when it goes below a certain score, limits their options. They may have used their credit card too often, defaulted on payments or filed for bankruptcy. Whatever be the reason, a need for cash may arise suddenly. The only way out in such a situation is to apply for a bad credit loan to meet the emergency.

Bad credit loans are unsecured and people who apply for and take such loans are considered high risk. These people are most likely to default on repayment. Even banks are not able to help out such a person since the applicant has a low credit score and is unable to offer any security or mortgage. For people in such a tight situation, there exists a class of lenders who will give out bad credit loans. The catch is that these loans come at unusually high interest rates, stiff charges and still stiffer terms if repayments are delayed or a rollover is asked for. There is usually no alternative than to approach such lenders and pay high interest rates on the bad credit loan. However, a little bit of research can help a person secure a good deal at the best terms. A person looking for such a bad credit loan could try out the following.

Bank: Most banks are not willing to shell out a large amount to the people who have got a poor credit rating. However, some banks, where the applicant has got an account and is a regular customer, may offer the opportunity of a loan despite the bad credit rating of the person. This is the first place a person should approach since being a regular customer increases their chances and also assures the bank that they will pay back the loan in time.

Lending Company: Besides banks, there are specific lending companies that offer such loans. Since these lending companies deal with people having bad credit rating regularly, they are upfront but have higher interest rates and fees. Delays would mean additional charges and if you ask for a rollover then you would end up paying still more. So plan carefully on the loan amount, repay it in the shortest possible time in maximum installments and be very careful not to default under any circumstances.

Online Options: There are several online companies online that look for customers from different places in this regard. Actually these sites are run by the lending companies and as such the terms of loan, interest rates and fees will be quite similar. The applicant has to fill up an online application. After the application is approved, the applicant would get the funds as bad credit loans electronically transferred to their account. People can compare the quotes and APRs of such companies with one another. Several sites have reviews written about them. Since there are a large numbers of lending companies, the online lenders offer competitive rates. However they are still quite high.

Credit Unions: You can also approach a credit union if you are a member. They too will charge a high rate of interest but the terms will be more favorable.

To apply for a bad credit loan a person would need to show their driver’s license, social security number, income proof and property documents (if required).

One should always read the offer documents very carefully, verifying the small print which contains the potentially most damaging clauses, before signing on the dotted line of the contract. Once you have signed you are bound to abide by the terms and conditions, so take precautions and be sure to have all matters relating to interest, fees, etc. fully clarified. Taking a little bit of extra time would not hurt in this regard. If repaid properly and in time, such bad credit loans might actually help to improve your credit rating.

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Tags:   guarantor loan, no credit check loans

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Submitted : 2011-01-29    Word Count : 724    Times Viewed: 267