Get A Bank Loan With Bad Credit
If you have a bad credit rating, getting a loan can be quite difficult. However, you can still get loans from lenders who serve people with bad credit. Getting the loan is not difficult but there is a catch: you will pay higher interest rates compared to borrowers with a good credit history. The higher interest rate is charged to compensate for the risk of the lender loaning you the money.
Bad Credit Loans
There are two types of bad credit loans: secured and unsecured bad credit loans. Both of these come with their pros and cons.
Secured Bad Credit Loans
For secured bad credit loans, you are required to provide security for the loan you are taking. In case you are unable to pay the loan, the lender will sell off the security to recover his money. The most common accepted forms of security or collateral include car title collateral to assets like properties and homes, cars, company shares and valuable stocks.
Unsecured Bad Credit Loans
For unsecured bad credit loan, no form of collateral is required. However, this is compensated by being charging high interest rates and limiting the amount of money that can be borrowed. Most lenders will not offer you unsecured loans unless you come with a cosigner who will guarantee to pay the loan in case you default on your payments.
Requirements For A Bad Credit Loan
When you are going to apply for a bad credit loan, the lender may require a number of documents. If you are applying for a secured loan, you may be required to present documents of the collateral that you are offering. These may include property titles and car log books. You may also have to come with your stocks broker to transfer your shares or stocks to the lender.
Apart from the above, you will also need documents that show where you reside and where you work. These can include bank statements of the last 6 months, pay slips, utility bills, among others. Find out the necessary documents required by the lender before you apply for a bad credit loan.
There are many lenders that offer bad credit loans and it is therefore important to compare their rates to find a good deal.
Disclaimer: We are an informational site that receives compensation from companies of products we endorse. We are independently owned and the opinions expressed here are our own.