When you have bad credit, you feel stuck. It is hard to move ahead when this title is holding you back. Any type of new debt can be hard to obtain. Things like cars, credit cards and loans seem unachievable. However, there is one type of loan called a Bad Credit Loan that may look past your bad credit history. A bad credit loan is a high interest, short term loan predominately taken out by a borrower with bad or poor credit. There are certain facts about these products that you should be aware of before proceeding.
Different loan companies have different credit rating requirements for their loans. On average, a bad credit loan can require credit scores of a minimum of 580-620. These loans are easier but not easy.
Because the loan company is taking the risk of your bad credit upon themselves, you will have to pay. The high interest rate allows them to offset the greater risk of the borrower defaulting on the loan. This makes sense because the higher credit score you have, the lower the interest rate you will get on a loan. If you have a higher score than you will have a variety of products to choose from as well.
Bad Credit Loans tend to have a shorter term than most standard loans. The time they are to be paid back is typically a year but max is usually a period of 36 months. The better your credit rating, the longer you have to pay back the loan (possibly up to 60 months). If the borrower does not pay back the loan within the term set forth in the contract than they will be susceptible to dealing with a collection agency or even legal action by the lender.
Just like any financial product, there may be conditions built into the contract in order for you to borrow the money. One of the conditions you may encounter is that you have to put forward something to secure the loan against. Things like a vehicle or a home may be what they ask for in order to give you the loan.
It is best to shop around to see which one is the best fit for you and your family. Please be sure to take these factors into account when doing your research.