For bad credit holders, the world seems dark when a financial emergency shows up. Banks and financial institutes aren’t going to help you and grant you a loan if your credit score isn’t impressive. Does it mean bad credit score holders will have no ray of hope when uninvited fund requirements are there?
Well, we have good news to share. A couple of bad credit loans are there to help such borrowers. Don’t know what we’re talking about? Try reading this post as we’re going to talk about the major types of loans for bad credit.
Bad Credit – Understanding The Term
Before we talk about the type of bad credit loan options you have, you must understand what a bad credit score means. Also, you may try sending your application to direct lenders via online loan providers, such as this one.
A three-digit number is usually measured on a scale of 300-850. A credit score signifies the creditworthiness of a person. Banks and financial agencies refer to this number to find out how trustworthy the person is when borrowing money.
In some countries, the score is measured on a scale of 300-900. Hence, the bad credit score limit can vary from country to country. If the score is measured on a scale of 300-850, anything under 580 is considered a bad score.
When the score is measured on a scale of 300-900, anything below 574 is a bad score. A bad credit loan is a type of loan that considers a score below 574 or 580 to borrow money.
Availing of a bad credit loan is a great deal as:
- You can apply for it online
- The processing time is quick
- There is no need to go through the extensive credit check history
- It provides you a chance to improve the current bad score by timely repayment
But, a bad credit loan isn’t always a good deal as:
- You have to pay high-interest rates
- Extra fees and penalties are there if repayments aren’t made on time
- Stringent repayment terms can cause a headache
- You can’t get a high amount
Key Types of Bad Credit Loans
Now that you’ve got the clarity of bad credit and bad credit scores, it’s time to find out what sort of loans are offered to bad credit holders. Here are the major types:
Payday Loan
A payday loan is an unsecured loan that any person with bad credit can use to fix any last-minute money crunch. These loans let you borrow a small amount in no time.
As far as repayment is concerned, a payday loan has to be paid back on the day you receive your salary. Processing is super-fast with a payday loan. You can even get money within a few moments of applying for the loan. It’s instant and hassle-free. So, it’s preferred when you need money without delay.
But, keep in mind that interest can be as high as 300%. So, take it only when you’ve got no other option.
Title Loan
As the name suggests, this loan involves using a vehicle title to borrow the money. Whatever credit score you’ve got, you can apply for a small dollar loan and get immediate funds by using your car or other vehicle. The lender will keep the vehicle as security and provide immediate funds. But, you’ll be allowed to use your phone as usual.
The interest rate on this loan type isn’t very high as it’s a secured loan. One is also allowed to make repayments in installments at their convenience. However, you can avail of a loan amounting to not more than 50% of the actual car value. In rare cases, when a car is new, you can avail of a loan of up to 90% of the total car value.
Cash advance
A cash advance is also a key bad credit loan type. In this type of loan, one can use a credit card to withdraw. There is no credit check process involved. All you need is a credit card and an ATM PIN. If you’ve got these two things, you can visit a nearby ATM and withdraw the cash. Here, the cash withdrawal limit isn’t more than the credit card limit.
It’s preferred when you need hard cash in your hand. You can also get a convenience check that you can use for making payments.
Final Say
If you’ve got bad credit, then don’t lose hope. You can still fix any last-minute cash requirements with the help of a bad credit loan. Such loans don’t keep an eye on credit score history. Hence, you will get dollars transferred to your account in no time.
Your options are a payday loan, cash advance, or a title loan. Try them out today and enjoy financial assistance in times of need.