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Those looking for personal loans for bad credit have a few options to explore. Three of the most popular are credit cards, home equity loans, and personal loans for poor credit. The money received can be used for a number of reasons including buying jewelry or upgrading the business. The best type will depend on the intent of use and the individual’s financial situation.
Here’s a little about each type, to help anyone make an informed decision when they decide to avail personal loans for bad credit.
personal loan
Personal loans can be obtained from most banks. As stated earlier, they can be used for anything and are based on the ability to present proof of income as well as assets. Those assets should be worth the amount the person is borrowing. It is a quick process for the application once these things are in place and accounted for and the applicant will know within a few days whether they are approved or not.
The main downfall is that interest rates are generally high, averaging around 12%. Repayment timelines vary but they usually do not exceed two years. Because of this, it is not recommended to finance any very large sums of money this way as many people have trouble paying them back in two years.
Credit Card
Credit cards are another option when consumers are searching for a type of personal loan for bad credit. They are similar to getting a loan as they are also repaid later. Cards are easy to use as they are widely accepted for payment on most things.
They are easy to apply for and can range upwards of $10,000. Applications are reviewed rapidly, usually no more than two weeks. There are even some that are reviewed over the phone and approved within minutes. It all depends on the card company. Terms vary greatly, so it’s important that whoever is applying really looks at all the fine print.
Many things have to be taken care of inside this print. At the top of the list are interest rates, annual fees, overage fees, and more. It has been proven that loans using credit cards accumulate more quickly than other types of loans because they are so available and easy to swipe at any retailer. For someone looking for personal loans for bad credit, this can be a foolish decision and end up damaging the credit and not repairing it.
home equity line
A home equity line of credit is a smart decision. It gives homeowners the ability to borrow against the value of their home. It is easy to find out how much one can get. All they have to do is take the market value of the home against the amount still owed on it. Many people choose not to do this if they are planning to sell in the near future. However, it is a good option if they are planning to stay there for a long time.
Like other personal loans for bad credit, one can use the money for whatever they want. They are often used for home improvement, consolidating loans, and more. Interest rates are below average and can be repaid in as little as 20 years under certain circumstances. There aren’t many downsides to Credible’s home equity loan; In some cases the interest is tax deductible. It’s hard to beat!
The main downside of this type of personal loan for bad credit is that the person taking it can sometimes end up in a worse position with respect to their mortgage. If there are two sources of income and they are more than enough to pay the bills each month, the person can probably easily pay off the loan. Otherwise, it may be of no use. Specifically, the consumer loses a job or is suddenly unable to work. Plus, rates sometimes fluctuate.
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