In the lending field, there are usually two basic options. The first is a secured loan, which implies borrowing money and using some asset like property as collateral. The second option is unsecured loans, where the borrower offers nothing to the lender as a form of security. That means that the lender risks getting nothing, should the borrower fail to pay. As you would guess, it becomes hard to get an unsecured loan if you have a bad credit history.
However, that does not mean that you are beyond help if you are a borrower with bad credit. There are a number of unsecured loans options for people like you, and we shall discuss the most common in this read:
Unsecured personal loans are usually the hardest to secure with bad credit, but they are the safest and most versatile. This is a conventional long term loan that will give you anywhere between $5000 to $30,000 to be paid over a period of five to fifteen years. The interest rates are not as high compared to other options, but you will need a cosigner to qualify for the loan.
When you need a relatively small amount of cash fast, payday loans can be a feasible option. They are usually between $100 and $2,000 and are perfect for fixing temporary money problems. However, they carry a higher interest rate, and that is primarily because they are only awarded for a short period, usually 2 to 12 weeks. If you apply for a payday loan, the lenders will not check your credit, but you need to be certain that you can repay the amount on time.
Unsecured Credit Card
Another ideal option for people with poor credit history is an unsecured credit card. Even though you will have to qualify for a small line of credit initially, these cards give you the freedom to spend as little or as much of your credit line without the burden of repaying the whole. However, it is important to budget your expenses, given that the interest rates of this type of loan are quite high as well.
Obtaining the Ideal Loan
If you have bad credit, finding the perfect unsecured loan package can be a challenging task. However, there are several options out there that can suit your needs and lifestyle. Ensure that you research all the options before settling for a particular unsecured loan option. That is the only way to find the perfect one for you.