Personal Loans For People With Bad Credit

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Locating personal loans for people with bad credit is a hard task because there are few lenders out there that are willing to give personal loans to people with low credit scores. If your successful securing your loan it will come with a high interest rate and most likely unfavorable terms.


Most lenders that loan to applicants with bad credit are payday loan companies. Beware that payday loans are illegal in some states and recent changes in the law for payday lenders have also made payday loans illegal for members of the military. With a typical payday loan, you might write a personal check for $115 to borrow $100 for two weeks, until payday. The annual percentage rate (APR) in this example is 390 percent! If you can repay the loan quickly, it may not appear such a bad deal. But if you can't pay off the loan quickly, that relatively small loan can grow into a large amount of debt. At 390 percent, a $100 loan will become $490 in a year and $2,401 in two years.

Another high cost way to borrow money is a tax refund loan. This type of credit lets you get an advance on a tax refund for a fee. APRs as high as 774% have been reported. If you are short of cash, avoid both of these loans by asking for more time to pay a bill or seeking a traditional loan. Even a cash advance on your credit card may cost less.

Other alternatives for obtaining personal loans for people with bad credit are title loans. This loan is secured by a clear vehicle title. Another source is securing the loan with items in your home. These lenders will secure the loan using serial numbers on common household items, like televisions, radios and dvd players. Lastly, if you own a home, you can obtain a loan on the equity available.

To improve your credit score to help you secure low cost loans in the future you should pay your bills on time. Delinquent payments and collections negatively impact your score. Keep balances low on credit cards and other revolving credit because high outstanding debt lowers your credit score. Apply for and open new credit accounts only as needed. and don't open an account just to have a better credit mix because it probably won't raise your score. Pay off debt instead of moving it around because owing the same amount, but having fewer open accounts may lower your score. Just remember that you don’t rebuild your credit score, you rebuild your credit history. Time is your ally in improving credit and there is no quick fix for a bad credit score, so be suspicious of any deals that offer you a fast, easy solution.

In conclusion, obtaining personal loans for people with bad credit will come with a high interest rate and may have to be secured. Your best option is to hold out until your credit improves or to find someone with good credit that will co sign.