Have you been applying for loans from legal money lenders found in www.moneylenderreview.com but being rejected due to your unpaid debts? With these situations, it may seem hopeless for you to get a loan, but with the help of a bad credit loan, you can now apply for a loan even if you still have unpaid debt.
What is a bad credit loan?
A bad credit loan is being offered for those borrowers who already have loans which they can’t pay completely. A lender who offers a bad credit loan accepts applicants with bad credit history if they are willing to pay the high interest rate.
Bad credit loans are also a good way for those first home buyers or those who are self-employed and are having a hard time getting a loan from banks and moneylenders as being regarded as high-risk borrowers.
Borrowers may be paying a high interest rate to get a bad credit loan but what they didn’t realize is that lenders also take risks from the borrowers for having them borrow a big amount of money even if they already have a bad credit history.
Even if applying for a bad credit loan is very tempting, you still have to think thoroughly if you can afford the repayment terms especially that this type of loan has a higher interest rate compared to others loans being offered by lenders.
There are some other alternatives you can choose with if you don’t want to face the high interest rate from a bad credit loan such as the following:
● Guarantor personal loan
In a guarantor personal loan, the lender can let you apply for a loan as long as you have a family or friend who would be your guarantor and if you can’t pay your loan, the lender will then give the responsibility of your loan to the guarantor.
Getting a guarantor personal loan may be a good option, but if you can’t pay the loan, it won’t just reflect on your credit history, but it could also affect your guarantor’s credit history thus make sure you can follow your loan’s repayment terms.
● Secured personal loan
Applying for a secured personal loan is easier compared to other loans because, in secured personal loan, you will offer collateral to the lender which makes the lender trusts you that you can pay your loan.
The only bad thing when having a secured personal loan is that when you can’t repay the loan, your lender would have the chance to get your collateral such as a vehicle or property.
● Payday loan
Most lenders who offer payday loans don’t ask for a credit history anymore hence you have a bigger chance of getting the loan. In payday loans, the borrower should be able to repay the loan amount plus the interest rate on their next salary, and if you can’t pay it right away, you will then be charged with a higher interest rate.
Aside from being charged with another interest, it is also not a good idea to skip your payday loan payment for this could reflect on your credit history and you don’t want to add another bad credit account in your records.
What is a bad credit rating?
A bad credit rating is the result of your rating from several banks and moneylenders where you have loans. If you have several loans that you aren’t able to pay, these banks and moneylenders will give you a bad credit rating.
Another practice that could damage your credit rating is when you exceed your credit card limit and making loan applications in one time.
There may be several options you can choose from where you can still get a loan even if you still have an outstanding loan and a bad credit history but make sure to it that you can pay your new loans. Paying a loan may be difficult, but there are ways too on how you can pay your loans without lots of stressful moments.
How to choose the right lender:
Checking the details of the loan, for example, is already a good move if you wanted to make sure that you can afford the repayment terms. Through checking the details, you can see how many years is the maximum tenure of the loan and compare it to other lenders; with this, you will be given more time to pay your loan and your monthly repayment would be lesser.
You can also compare lenders when it comes to their interest rates and chooses the one that has the lowest interest rate. With all the lenders you can find in the country today, a lot of them tends to compete with each other when it comes to who got the lowest interest rate which is already a great opportunity for the borrowers to have a lesser interest.