What Is A Bad Credit Personal Loan?
We are external financial help borrowed from a bank, credit union or online lender that you will need to pay back in fixed monthly payments or installments typically over two to five years. The rate of interest on our loans varies from lender to lender. Personal loans can be either secured or unsecured. However, most personal loans are unsecured in nature and are not backed by collateral.
How It Work?
Submit The Loan Application
To be approved for a personal loan, you will first need to apply for it. These loans are easily available online from a range of well-known and trusted lenders. All you need to do is fill up a simple online application form with your basic personal details and just click to submit it. It won’t take more than a few minutes to submit the form. You need to read about the terms and conditions of loans carefully before finalizing any decision.
Getting The Funds:- It takes a few business days to get the amount in your bank account. The actual time varies from lender to lender and bank to bank.
What Rates One Can Expect To Get?
Interest rates on personal loans can vary, depending on several factors such as borrower’s credit, income, whether there is a cosigner or not. Also, for the borrowers with solid credit rating, the interest rates will be significantly lower than for those borrowers with a bad credit score.
What Is The Reason Behind Applying For A Personal Loan?
The reason to apply for such loan varies from individual to individual. This may include-
- To consolidate debt
- As an alternate to payday loans
- To finance home renovation work
- For handling unexpected emergencies
- To take care of medical expenditure
- To finance a child’s education
- For settling wedding expenses
- To make a big purchase
- To take a dream vacation
What Are The Characteristics Of Bad Credit Personal Loans?
Personal loans market is huge and big. Everybody wishes to get these loans to accomplish their number of requirements. We are very popular in the Canada market and allow both homeowners as well as tenants to apply for these loans. We are provided for amounts ranging from C$5,000-C$25,000 or more, repaid over a term of 5-10 years. The loan amount depends on the need and financial capability of the borrower.
Eligibility criteria for we loans vary from lender to lender. However, the basic requirements to apply for the loan includes attaining a minimum age of eighteen years, having proof of regular income source, holding a valid healthy bank account in your name that accepts direct deposit and also having permanent Canada citizenship.
Before approving you a loan, lenders will check your credit score. They will do that just to determine your creditworthiness. People with good credit score have the opportunity to get a better rate on our loans as compared to the ones with bad credit tag. With modern lenders and improved financial market, people can easily get bad credit personal loans but at a higher interest rate.
What Are Things To Take Care Before Applying For A Loan?
Different lenders have different loan approval criteria for personal loans. Therefore, different lenders will offer different terms and conditions and different rates. Thus, you must take your time to compare loans from different Canada lenders. A good comparison will provide you with the opportunity to make a better choice. Making comparisons is not at all difficult or hectic. Many loan comparison websites are available online and provide loan calculators that will let you estimate how much one can get and at what cost. You can even collect loan quotes for free from different lenders and compare them carefully to get the most feasible loan deal.
The first and most basic rule that you need to apply ahead of applying for a loan is how much you can get and how much you can afford. You should not borrow more than you earn. It is a constant struggle to pay back the loan. Thus, you must make the right decision at a right time.
What Are The Benefits Of Bad Credit Personal Loans?
There are several benefits attached to we loans. Firstly, they are easy to qualify. Secondly, the process of getting loans is not lengthy. Thirdly, We loans are fixed loan term or a fixed monthly payment. Last but not least the amount borrowed with our loans can be used to meet several purposes.
What Are The Disadvantages Of Bad Credit Personal Loans?
Despite several benefits attached to personal loan, it is not always a good idea to have them. Drawbacks of personal loans include:
- Higher rate of interest than other loans
- Origination fees
- Prepayment penalties
- Potential for scams as not all loan offers are legitimate
How To Get A Good Deal On A Bad Credit Personal Loan?
We are several steps that you need to take care to make that you get the best personal loan deal:
- Make Sure You Deal With The Legitimate Lender
Just be sure to stay away from a scam. First, you make sure that the lender is registered in your state. You can find this information on the lender’s website. If the lender’s site is not secure and doesn’t contain any street address, then it signifies that the business is fake. Other warning signs include assurance of loan approval without any credit check, asks you to pay the origination fee with a prepaid debit card or pressurize you to apply for a loan by saying it is a limited offer.
- Don’t Sign Up A Deal Without Making Comparison
It is important to compare personal loans deal from multiple lenders before making any final deal. Check out the rates and terms of the loan, it’s APR and other hidden costs and charges before you actually apply. Consider visiting an online loan comparison website to compare loans at a glance.
- Ask Yourself If You Can Afford It
When you are taking out a personal loan, just remember you are promising to pay it back on time. Failing to repay back the loan on time will cost you really high. Penalties and late fee charges will be applied that would make your loan even most expensive. So, before you sign on the dotted line, check if you can afford to make the monthly payments.
- Try To Keep The Loan Term Short
Longer-term seems affordable as they are spread over for a longer time with lower interest rates. However, in most cases, the longer you spent on making payments, the more you will pay in interest altogether. In the long run, it is better taking out a loan with the shortest term to manage payments in a much better way.
- Check For Prepayment Facility Without Any Penalty
Check whether your loan has a prepayment penalty or not. If not, then you must try hard to pay off your loan faster to save money on interest. You can make extra payments whenever you have spare fake private lenders cash or can add little extra to your loan repayment with every monthly payment. You can also check whether the lender will offer you any discount on early pay off of the loan.
What Are The Alternatives To Bad Credit Personal Loans?
Depending on your financial condition, taking up a personal loan may not be a good option for you. Before considering personal loan as a last resort, check out the alternatives and see if any of them works for you:
Balance Transfers- Check if you can qualify for a credit card with a zero-interest balance transfer offer as it could be a cheaper alternative to a personal loan. You can transfer the debt to the new card and pay it off within the introductory period, you will pay no interest.
Credit Cards- Borrowing money using your credit cards can be a wise option than applying for a personal loan. Check the interest rate on credit card and use a calculator to figure out how long it will take to pay off the debt and how much interest you will need to pay. You can also use a personal loan calculator to check the same. Compare the two numbers and see which loan is cheaper.
Home Equity Loans- Get a home equity loan instead of a personal loan if you own a property in your name. It is a type of installment loan, allowing you to borrow larger amounts for lower interest rates than that of personal loans. However, you need to pledge collateral for the loan, so if you can’t pay, the lender will seize your home.
Bottom Line:- Bad Credit personal loans can be a good way to arrange the ideal loan amount for handling some important financial requirements, but they are not the right match for everyone. Every individual is different and so are their requirements. Read carefully about terms and conditions of these loans and if they work in your favour. If applied, make sure to make timely repayment of the loan as they already come up with higher interest charges and can turn even more expensive in extended.