Alternative Financing for Poor Credit
Default payments, charge-offs, foreclosures, and a court ruling against your name can all lead to a bad credit score. Whatever the reason, having bad credit can limit your finance options. Traditional banks and mainstream lenders rarely give loans to people with poor credit history. There are companies that offer loans for bad credit but these loans boasts higher interest rates. To ensure you are not stuck in a financial crunch, you can use any of the following borrowing options.
Car Loans for Bad Credit
When wanting to own a car but can’t raise the required finances, bad credit shouldn’t stand in your way. Numerous auto lenders are now willing to offer car loans for bad credit. The internet is always a place to start when searching for such. The lenders base their loans on your ability to pay rather than on your credit history. They, therefore, require you to bring your pay stub as proof of employment.
Applying for longer duration loans may be a viable option when your monthly income is low. However, you’ll have to pay more than if your repayment period was short. A more viable option is https://www.arcct.com/installment-loans.html or to go for a cheaper car. Some unscrupulous dealers will try to manipulate the interest rates once you agree on the price. Always ensure you have a pre-approval letter before agreeing on the price.
When applying for the loan, know your credit score. A sub-prime credit score attracts higher interest rates. Also be realistic. There is no point in going for a loan you can’t repay. In the event of late or default payments, your car or collateral may be confiscated. However, if you pay on time, lenders may submit the report to credit bureaus, hence improving your credit rating.
Payday loans, otherwise known as paycheck loan, cash advance, or check loans offer a convenient way of getting out of a cash emergency before the next payday. Numerous companies offer these loans. When shopping, consider the fees they charge. Another factor is the time taken. Some disburse within 24 hours, but there are those who will do it within 1 hour.
Unlike car loans, payday loan doesn’t require security. The collateral here is your payday’s paycheck. The best thing is that they don’t affect your credit rating. All you need is a regular job and a running paycheck account. On the next payday, your account is automatically debited for the loan and the accrued interests. However, you can extend the duration, but this only increases the interest payments.
Auto Title Loans
Auto title loans are much like payday loans. However, it requires you to pledge your car as security. The car title loans online are typically repayable within one month, but some lenders can extend the repayment period. The interest compounds monthly. Taking a shorter period loan will require you to pay less interest.
Whenever you fail to make the payment within the required time, the accumulated interest rolls over. By law, you can have your car repossessed after flipping over six times. The benefit of auto title loans is that you can keep you car while you pay your debt. Most credit bureaus consider your recent payment rather than your past when establishing your credit score. You can take the loan to improve your score.
Personal Loans for Bad Credit
When in bad credit, you can prove your credit worthiness to lenders by taking personal loans for bad credit. The loan offers you a second chance to credit facilities. It can either be secured or non-secured. The later carries a higher rate of interest than the former. When going for the loan, be realistic. Taking a loan you can’t manage will only worsen your already bad credit.
Acquiring personal loan for bad credit is quite straightforward. You only need to be 18 years or older, be a permanent residence in your locality, be employed in a gainful job, and be in your current job for more than six months.
Prepaid Credit Cards
If you have bad credit, you can secure a loan if you have a prepaid credit card. It can be secured or non-secured. A secured one uses the money on your saving account as collateral. When you default, the money on your account will be used to pay the loan. You don’t need collateral with non-secured one. When shopping for a lender, consider the fee and the interest charged.