A lot of people have difficulty realizing that they have a bad credit history, until the crucial moment when they get rejected for a loan application. Because of the recent decline in the global economy, many have been buried deeper into debt and in desperate need of monetary sources.
If you have a bad credit rating, you will find out that it would be near impossible to get an approval when you apply for a loan from banks. However, there are lenders that will provide you with a loan, regardless of whether you have an excellent credit history or one that is bad. One such loan that lenders offer to people having this type of credit are bad credit personal loans.
When you apply for these personal loans you can choose to get a secured or an unsecured personal loan. Each one has its own advantages and disadvantages. So it would be best to weigh your options according to your need before deciding to get a loan.
An unsecured bad credit personal loan is one that does involve having collateral. In the lender’s perspective, this type of loan is very risky. Since there is no collateral involved, the lender will not be able to cover up for loses in case you default your payments. Because of this, an unsecured bad credit personal loan often have higher interest rates and often takes longer to get approved.
- Credit cards for people with bad credit history are one type or unsecured loan that specialize lender may offer. Though this can be quite helpful in allowing you fill in your budget, they are often accompanied with very high interest rates. Aside from that, they also have high fees that you have to pay in order to get one.
- A payday loan is another type of unsecured personal loan which can allow you to borrow around £ 100 – 1,000. This is a short-term loan where you can borrow the amount and then repay the debt together with interest rate after a week or two, or on the next payday. However, to be able to qualify for this kind short-term loan, you will need to have a stable income like your salary, pension, etc.
A secured bad credit personal loan is one that involves having your property used as collateral for your loan. This will give the lending company the rights to seize your property if ever you default your payment. Because of the nature of the loan, it is often approved in much shorter time. However, this type of loan can be quite risky for you since you will be facing the possibility of losing your home, car or the property that you have used as collateral if you fail to make your payments.
- Auto loans are a secured loan where the car is used as the collateral for the loan. This is type of secured loan is often accompanied by high interest rates.
- Bad credit home loans are secured loans where your home is used as collateral. This type of loan is approved much faster and is given with much lower interest rates.