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How Can You Get Personal Loans for Bad Credit?
You have an unexpected expense this month, and you aren’t going to receive your paycheck until next week. This bill has to be paid today, but if someone is going to offer you a loan, you would have to have good credit. The simple truth is that you have poor credit, and you are concerned that lenders will deny you a payday loan.
It is true that lenders will perform a credit check to find out if you have good credit, but if they learn that you don’t, they may refuse to offer you an online personal loan. They could also charge you a high interest rate, and this would mean that you would have high payments to make every month. The good news is that someone with bad credit can obtain an unsecured personal loan today, and you may not have to pay the highest interest rate.
Why Your Credit Score Matters
Personal loan lenders can provide you with a bad credit loan even if you have bad credit or no credit at all. When lenders perform a credit check and learn that you have several missed payments, they feel justified in charging you a higher interest rate than they would charge someone with good credit. This is because loaning money to you is riskier than loaning to someone who has a high credit score.
Although you may have to expect to receive a high interest rate for your bad credit personal loan, you can ensure that you will receive the lowest interest rate possible for your situation. The internet has several online lenders, so you have the opportunity to compare the interest rates that each lender is offering.
Things to Consider
The first figure you will want to consider is the annual percentage rate (APR). The APR is the interest and the fees that you will pay to borrow money for the year. This may be a high number if you have bad credit. You will also need to ask each lender how long the loan repayment period will be. Keep in mind that a long repayment period would mean that you will have more time to pay, but you will pay more in interest. A long repayment period may lower your monthly payments, but you might think that it is worth it to make higher payments so that you can finish paying the loan in full, in a shorter period of time.
The lender will determine how much your monthly payments will be based on the amount that you borrow. If it is a large sum, you will need a longer repayment period so that your payments will be affordable. If you borrow a smaller sum, you could make larger payments to pay the loan in full as quickly as possible.
Is Borrowing a Good Idea?
You might be wondering if it is really a good idea for you to borrow more money because you have bad credit. Even though your credit is poor right now, borrowing can actually help you improve your credit scores. After you take out a short-term loan, lenders report every payment that you make to the credit bureaus, and this has the effect of causing your credit score to increase. If you make all of your payments on time, you may find that you will eventually have good credit in the near future.
It may not be possible for you to find loan offers that you can afford, but you do have one option open to you. It will improve your chances of getting a personal loan if you have a cosigner. If you have a friend who has good credit, he or she can agree to take over the monthly payments for you if you need to stop making them. The person you choose will need to be a family member or a very close friend. In some instances, a lender will allow you to report your spouse’s income on your loan application. This will improve your chances of being approved for a personal loan.