Personal Loan With Bad Credit by Following One of These Three Paths

Are you one with bad credit? Do you need a large personal loan of $10,000? Though a large, $10,000 personal loan with bad credit is not super easy to find, it is also not impossible. If you are aware of what to do and where to look, finding that $10,000 personal loan with bad credit is possible. This article will provide you with all the tips and tricks you need by providing three legitimate paths that you can follow.

Path 1: Find a Cosigner

Because of your bad credit, $10,000 personal loans are not easy to come by. But what if you could negate that bad credit score and instead apply for a personal loan with a good credit score? Sound impossible? Well, it’s not. By finding a cosigner with good credit, you will be able to apply for and receive a $10,000 personal loan with ease.

There is one, major stumbling block here, though. When you use a cosigner on a personal loan the person who cosigns with you is taking equal responsibility for the repayment of that loan. Essentially, that person is putting his or her credit on the line to get you the personal loan you need. This means that you need to be absolutely certain that you can repay this loan. Also, only approach people who you trust and who trust you in return because failure to repay your loan can ruin a relationship

Path 2: Use Collateral as Security

If you cannot find a cosigner, the next option is to find collateral to back your loan. Similar to using the good credit of another person to insure your $10,000 personal loan, using the value of real property can accomplish the same feat. Borrowers with poor credit who own a home can use their home’s equity to secure the loan in this regard. In some states, borrowers can also use their car or truck to secure the loan, but it needs to be paid off and worth more than the value of the personal loan you take.

Home equity loans are the better choice for this reason and are far easier to acquire for bad credit borrowers, but there are still considerations that you need to make. Just as with a cosigner, there are major consequences if you fail to repay your loan as you agreed. In the case of secured loans, you will lose whatever property you leverage against your $10,000 personal loan. So therefore, failure to repay this loan could result in losing your home or vehicle.

Path 3: Collect Several Smaller Loans

Because of your poor credit, finding one, unsecured loan for $10,000 without a cosigner is quite simply impossible. However, you may be eligible for several smaller loans such as payday loans or cash advance loans. You can then add all these small loans up together and get the $10,000 you need.

Cash advance and payday loans are really great choices if you need to get a loan with bad credit for one simple reason: no credit check is required. Therefore, your bad credit score will not count against you. There are some caveats, however, with these loans. First, because of the lack of a credit check, the interest rates on cash advance loans are slightly higher than any other loan you will find. Second, these loans are meant only as short term solutions. Generally, the repayment period on cash advance loans is 14-90 days. Clearly, you should only follow this path if you will have the money to repay your loan quickly.

Before Opting for a Personal Loan

By virtue of being an unsecured loan, personal loans have a very high rate of interest attached to it. So one should consider taking a personal loan only if:

You do not have an asset/security against which you can get a loan. For e.g. if you have an FD you can pledge, a secure loan might make more sense.
You have some visibility on your cash flows and are sure that you will be able to repay the EMIs (Equated Monthly Installments) in time. Else you are bound to enter into a debt trap.
There is an emergency and you need funds immediately. A personal loan can be taken because the processing time is much lesser on account of minimal documentation.

Opt for personal loans only to meet your essential needs which cannot wait. It should be your last resort. Taking it for satisfying leisure needs can prove to be costly i.e. for gambling, buying a new car (a car loan is a better bet with a lower interest) etc.

Before you choose your personal loan:

Calculate the cheapest loan offer: These loans come with very high interest rates ranging from 14% to 25%. Compare interest rates and get the complete picture by understanding the annualized interest rates for each offer. Then figure out the total amount of repayment you need to shell out with all the offers before opting for the loan of your choice.

Processing fee et al: You need to keep in mind the processing fee and other fees that will be levied when you apply for your personal loan.

Prepayment penalty check: Ask upfront if there would be any penalty payments for prepayment of the personal loan at any point in time. More often than not loan consumers tend to pay up their loans earlier than planned to be rid of debt. Hence, it’s important to know if your personal loan offer allows part prepayments. If that is the case, then you should be aware from what time frame in the loan period you can start prepaying and understand the cost you incur due to such prepayments in part or full.

EMI and tenure: Evaluate all loan offers. The first condition for loan offer selection is the total money outflow that the loan will cost. The second factor is the EMI. A loan offer with a lower EMI and a longer tenure may seem attractive, as it could be easy on your purse strings, however not all such loans prove to be cost effective in the long run. Hence, first calculate the total loan cost and then try to opt for a higher EMI, which you can comfortably manage to enable a shorter loan tenure.

Keeping track of your credit history: Especially in the case of unsecured loans, your credit history, which is recorded by CIBIL (Credit Bureau India Limited) plays a critical role in your loan application being accepted. A good repayment track record ensures an instant loan approval but brownie points in the form of more attractive interest rates.

Who is eligible for a personal loan?

The eligibility criteria and their specific details may differ from banks to bank based on their perception of the risks associated with such loans. However, nearly all banks divide the potential borrowers into three categories:

Salaried individuals
Self employed individuals
Self employed professionals

Other factors which are taken into consideration are, age, residence, work experience, repayment capacity, past obligations and place of work.

What documents are required for personal loans?

Personal loans require the least number of documents, making it the fastest to be approved. Typically, financial institutions would require proof of identity, residence, income and also 3 to 6 months of your bank statements. Some banks also require guarantors and the same set of their documents.

Alternatives to a personal loan

As indicated in the beginning of the article if you have access to investments that you can pledge, like shares, fixed deposits, gold, insurance policies etc. you can obtain a loan against them. The interest rates are lower compared to personal loan interest rates.

How to Find Low Interest Personal Loans For People With Bad Credit

Wondering where to get a personal loan?

You have a variety of places where you can get a personal loan.

If you’re looking for a personal loan, there are many places you can go. The key is to take your time and compare your offers, so you can find the best rate with the lowest fees.

Where to look for a Bad Credit Loan?

Fill out one form and receive up to four Bad Credit Loan offers. You can then compare rates and fees and decide which one has the best product for you.

Credit unions:

Usually credit unions offer Payday Loans at interest rates that are a couple of percentage points below other lenders.

Banks:

Although it is possible to get a Bad Credit Loan from a bank, many prefer for you to get a credit card simply because that creates a long-term relationship between you and the bank.

Advantages:

A Bad Credit Loan can have certain advantages. If you do not own a home or do not have much in home equity, a Bad Credit Loan may be your best choice. If you get a Bad Credit Loan that has a fixed rate and term, it forces you to be disciplined and pay the loan off within that timeframe, unlike a credit card which tempts you to continue spending. Also, the interest rate on a Bad Credit Loan is usually lower than that of a credit card (although the credit card’s initial teaser rate may be lower).

Disadvantages:

When considering a personal loan, be sure to weigh the disadvantages. For example, the interest payments are not tax deductible while the interest on a loan secured with property usually is. Also, rates can easily be higher than 10 percent on a personal loan. Mortgage and home equity loan rates are much lower than that. That means you will end up paying far more interest on a Payday Loan than you would on a home equity loan for the same amount.

All that being said, sometimes there is no way around needing a personal loan. If you decide to get one, remember that the rate you get will not be as good as it would be with a secured loan. This makes it is especially important to compare as many offers as possible so you get the best rate available to you and also pay as little in fees as possible.

A good way of solving your money problems is through applying for Payday Loans. But of course, a Payday Loan would mean that you are obligated to pay for it every month with your own money. So if you aren’t sure that your salary could handle another kind of payment, then maybe you should think hard before you do apply for a Personal loan. Not only will a Payday Loan limit you of your monthly budget, it could also be troublesome especially if you aren’t prepared with the loans interest rates.

It is also best if you have a good knowledge regarding the terms and conditions of Payday Loans. Ask friends and relatives about the lending companies and where to get the lowest interest rates. This kind of knowledge could equip you with enough know how when it comes to applying for your own Personal loan. Be sure and do yourself a favor and find out what and what not to do when it comes to Bad Credit Loans. As the name suggest, Payday Loan can be taken out for any of your personal needs. However, make sure that the reason you are going for this loan is a legitimate one and do not indulge in taking out a loan for silly purposes.

For US citizens it is very easy to get a Payday Loan sanctioned by banks, and reputed vendors, who in turn charge a very low and affordable interest rate.

A good way of solving your money problems is through applying for Unsecured Cash Advances. But of course, a Personal loan would mean that you are obligated to pay for it every month with your own money. So if you aren’t sure that your salary could handle another kind of payment, then maybe you should think hard before you do apply for a Personal loan. Not only will a Personal loan limit you of your monthly budget, it could also be troublesome especially if you aren’t prepared with the loans interest rates. It is also best if you have a good knowledge regarding the terms and conditions of Bad Credit Loans.

Ask friends and relatives about the lending companies and where to get the lowest interest rates. This kind of knowledge could equip you with enough know how when it comes to applying for your own Personal loan. Be sure and do yourself a favor and find out what and what not to do when it comes to Unsecured Cash Advances. As the name suggests, Personal loan can be taken out for any of your personal needs. However, make sure that the reason you are going for this loan is a legitimate one and do not indulge in taking out a loan for silly purposes.