If you have bad credit but need to borrow money, you may be wondering if it is even possible to get a loan or what kind of loan you need. The answer is a bad credit personal loan.
What are Personal Loans?
Personal loans are loans that are used for things other than business. That means you could use it to consolidate debt, remodel your home, pay for medical expenses or an emergency. Also, most personal loans are unsecured meaning you do not need to have any type of collateral to obtain one.
In addition, personal loans are installment loans. That means you make monthly payments each month until the loan is paid off. The payments are a percentage of the total amount due as well as any fees and interest added.
Finally, personal loans tend to be longer term loans that can be anywhere from one year to five years long. This is different than shorter-term loans that you might find at a payday loan company (See: What is the difference between bad credit personal loans and payday loans?) where you pay the full amount in as little as two weeks.
What is a Bad Credit Personal Loan?
A bad credit personal loan is no different than regular personal loans except lenders will give money to those with a lower credit score than other loan types. For example, a good credit score is 700 and a great credit score is 800 or more, but what if you have a credit score of 650 or even 600? Then you might not qualify for a loan from many lenders, and that’s when you need to consider bad credit loans.
What can You Use a Bad Credit Personal Loan For?
The nice thing about this type of loan is that you can use it for whatever you need it for. If you are careful, you can use it to improve your credit score. Of course, what you use the actual money is up to you. Many people will apply for bad credit personal loans to help pay for emergencies or medical bills.
In addition, this type of personal loan can be used to consolidate your debt, pay your federal income tax, or even remodel your home. You might even use it for car repairs. The uses for bad credit personal loans are almost endless.
What You Need to Know Before You Apply
Keep in mind that while there are lots of good things about this type of loan, there are a couple of things you need to keep in mind. First, because your credit isn’t as good as it could be, you will be paying a higher interest rate. There is really no getting around that fact. Of course, as long as the interest rate is lower than the typical credit card rate, then it still makes sense to apply, and that is normally the case.
Secondly, if you obtain a loan and keep on using your credit cards or applying for other types of credit as well, you might find yourself getting deeper into debt with no way to get out of it.
The bottom line about a bad credit personal loan is that it can be a good option to get the money you need and help your finances. You just need to be aware of the possible issues that can come up if you are not careful.
This information was brought to you by BetterLoanChoice
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