Until a few years ago, it was practically impossible for people with bad credit to get an unsecured personal loan. Banks, credit unions, and other traditional lenders just did not want to get involved in making small loans to folks with poor credit. Traditional lenders do not have a monopoly on the lending business any longer.
Borrowers With Bad Credit Should Shop Around
Before taking a bad credit personal loan, it would behoove a borrower to do do a little shopping for a lender, just as they would shop around for a car or a pair of shoes. Interest rates and repayment terms can vary widely from lender to lender. The internet is a good place to start the shopping process. Making applications over the internet can show the shopper bids within a few minutes from most lenders. Get at least five bids before you decide on which lender to use. Never take the first offer. With many lenders, you may be able to complete the entire process, from making an application to having the money put into your bank account, completely online.
Borrowers With Bad Credit Must Satisfy a Few Requirements
Non-traditional lenders, recognizing a large market for making loans to folks with poor credit, are coming forward to help those who need an infusion of cash to get through financial hard times or to deal with unexpected emergencies. These lenders pay little, if any, attention to the credit histories of borrowers. They do ask for certain information: Proof of identity. Proof of residency. Proof of Social Security Number. Proof of an active bank account. And, most importantly, proof of employment. These requirement can vary widely from lender to lender.
Borrowers With Bad Credit Should Not Expect Huge Loans
Non-traditional lenders, because of the risk involved, usually lend money in the $500 to $1,000 range. However, some lenders may offer as much as $15,000 under certain conditions. These lenders also must demand rather high interest rates, this is also because of the risk involved in making personal loans to people with bad credit ratings. Before you take any loan, you should carefully calculate exactly how much you need to help yourself financially and how much you can afford to pay when payments are due.
Checklist for People With Bad Credit Seeking Personal Loans
If you are facing a financial crisis or must have money to cover unexpected needs, keep these matters in mind before you make any loan applications.
1) Borrow only what you really need, scrutinize your budget to figure out exactly how much you can afford to repay and in what time frame. Do not forget to include interest rates in your calculations.
2) Use the internet to get bids and make applications. Look carefully at interest rates and repayment schedules. Never take the first offer.
3) Have your documentation in hand: Bona fide picture ID. Social Security Card. Proof of residency. Proof of active bank account. Proof of employment.
4) Understand that loan amounts cannot be too generous and that interest rates are rather high. These constraints exist because of the high risk involved for lenders.
Understanding the basics of unsecured personal loans for people with bad credit, as outlined above, will help you be a wise borrower. Just remember to keep your loan request modest and make your repayments on time. Be careful and satisfy the terms of the loan. Loans of this nature can even help boost your credit scores.