Personal loans are an effective way to deal with many significant expenses like travel and home improvements, but securing one with bad credit can often be difficult. In most cases, traditional lenders will not be willing to lend you funds if your credit rating is anything below 600.
Luckily, you can usually try to apply for a personal loan from a credit union. They will usually consider a borrower’s history as a member, so your chances of being approved can be high, even with a poor credit history. However, you will need to qualify as a union member first in order to benefit from their low APRs and high approval rates.
A more practical option is to obtain loans for bad credit here, as there are a number of online lenders that specialize in providing bad credit loans to potential borrowers. Most of them even offer consumer-friendly features, like same-day funding and multiple loan options, which can often be invaluable for anyone in need of cash in a hurry.
And all you would usually need to do to get started is fill out an online pre-approval form with a credit broker service like CocoLoan. Within minutes, you will receive a decision on your application, and if approved, you will be able to compare offers from multiple lenders.
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Ways To Improve Your Chances Of Getting A Personal Loan With Bad Credit?
Getting approved for a personal loan even with a less-than-stellar credit history is not impossible. However, it often helps to improve your odds of success and even the interest rate that you end up securing by following some of the steps below.
#1. Review your credit report
The first step before you try to apply for any type of loan is to check your credit score. This will usually play a huge part in determining if you’ll qualify for a loan as well as what interest rate you get.
As such, it’s important that you take the time to see where you stand and if you can take any steps to improve it. After all, there may be some discrepancies that you can report as inaccurate, and if they are corrected, this can help to improve your credit score.
#2. Compare your loan options
The online lending market can often be extremely competitive, so it is in your best interest that you take the time to shop around to see if you can secure the best loan offers possible.
It is for this reason that credit brokers like CocoLoan can be helpful, as you can conveniently browse multiple lenders in one place. Sarah Ross, the co-founder of CocoLoan, even went on to state, “Our aim is to provide borrowers with an easy and clear path to securing competitive loans, even if they have a poor credit history.”
#3. Get pre-qualified
One of the benefits of using online bad credit lenders is that many of them make it extremely easy to get pre-qualified. This allows you to get a better picture of the loan rates and terms that you may qualify for without the need for a hard credit check.
Moreover, most bad-credit lenders typically come with their own different rates and ways of working with borrowers. After all, securing a personal loan with bad credit also involves a whole host of other items being reviewed, such as your income, employment history, and even your educational background.
In this respect, take your time to assess which lenders are actually in a position to provide you with a loan before you formally apply for funding.
What Other Types of Loans Are Available For Bad Credit?
Aside from personal loans, there are also multiple types of bad credit loans available, some of which may be more accessible than others, depending on your situation. Some of the most common alternatives include:
Payday loan: Payday loans are essentially short-term loans that act as small cash advances on your paycheck, hence the term “payday.” They typically go as high as $1,000 and are typically due by the time your next paycheck arrives. They also come with exorbitantly high interest rates and short repayment periods.
Title loan: A title loan is a form of secured lending that does not require borrowers to have good credit. Instead, your car is put up as collateral for the loan, which makes it easier to access higher loan limits and lower interest rates. However, the downside is that failing to repay these loans on time can often result in your car being repossessed.
Same-day loan: A same-day loan is exactly as described. This is the type of loan that allows you to access the funds you need on the same day of approval. These types of loans are often useful when you need to deal with urgent and unexpected expenses like car repairs, medical bills, etc. However, much like any other bad-credit loan, they typically carry high interest rates.
What Should You Consider When Applying For A Bad Credit Loan?
Before you decide to make a final decision on any type of bad credit loan, it is important that you take into consideration the full picture.
For starters, you need to take into account how much the monthly payment will amount to before you sign any loan agreements. This means reviewing your budget as well as the number of loan payments that can fit within your cash flow to ensure that you aren’t taking on more than you can reasonably handle.
You also need to take some time to understand what the loan’s total interest costs are, which usually include both the principal and the interest that you are meant to pay over the life of the loan. Most bad-credit loans tend to come with extremely high interest rates that can often be very difficult to repay.
As such, you should carefully calculate the amount of interest for each loan offer that you get in order to determine the most favorable option. Finally, you should also check to see what kind of fees are associated with the loan offer before you sign on the dotted line.
After all, most bad credit loans typically come with a variety of extra costs, like origination fees, pre-payment fees, and late payment fees. These often vary depending on the lender in question, so make sure to compare the extra costs so that you don’t end up stuck with a bad surprise.
Final Takeaway
Having a poor credit score should not rule you out of being approved for a personal loan. However, it often pays to take extra steps to improve it before applying, such as reviewing your credit score and shopping around with several lenders.
You should also keep in mind that there are a number of predatory loan providers out there, so do not accept any loan for bad credit if you aren’t confident in your ability to repay it on time.
It is for this reason that making use of trustworthy credit brokers like CocoLoan can often prove invaluable, as they always vet every lender in their network. This effectively reduces any risk of falling victim to unscrupulous lending practices while borrowing bad credit loans online.