Personal Loans – Now Available For All Credit Grades, Bad Credit Included!

Personal loans usually come in two forms: unsecured and secured. Unsecured loans are granted based on previous repayment history of a borrower and only require a signature to get. Secured loans have collateral requirements to be satisfied before the loan is granted. Both of them are available to all credit grades. Secured loans commonly feature higher approval rates and lower borrowing costs, as they pose less risk to lenders. Higher rates typically accompany unsecured loans, as lenders have nothing to fall back on, except for legal proceedings, to recover losses in case of defaulted payments.

Bad credit borrowers usually have difficulties obtaining unsecured personal loans, as they already have history of unsatisfactory borrower behavior on their credit reports. That is why lenders are less motivated to grant money to bad credit borrowers, as they expect irresponsible consumer behavior to continue. However, bad credit market is quite attractive to lenders, as they are able to extract additional profits, and they try to develop products specifically oriented towards people with past credit problems.

Bad Credit Solutions

Personal loans for bad credit are available in both, unsecured and secured forms. In first case, to minimize the risks, associated with bad credit lending, banks and financial institutions endorse restrictive criteria, such as lower loan amounts and shorter durations. Another instrument to offset lending risks is inflated interest rate offered to bad credit borrowers. While unsecured loans are available to almost all bad credit borrowers, it is highly recommended to consider secured loans, as they feature less stringent requirements and allow for money-saving opportunities for poor credit borrowers. Secured loans have collateral requirements to meet, and they pose lesser risk to lenders, as they have effective way of recovering losses should a borrower default on a loan. That is why lending criteria is more relaxed, allowing for lower interest rates, longer terms, and higher loan amounts.

Bad Credit Personal Loan Requirements

No matter whether you go after a secured or an unsecured loan, there are some requirements to be met. Lenders need to establish your identity and ability to repay the loan. That is why be prepared to furnish all the necessary proof with a lender of your choice. A valid identification will be needed to establish that you are indeed the person who is applying for a loan, are of legal age and legal immigration status, i.e. a person of 18 years or older, who is a citizen or permanent resident of the United Sates. After that, your financials need to be presented to the lender, showing your repayment ability. Banks need to know that you have a stable source of income that is sufficient to cover all your basic living needs, as well as your future loan payments. Therefore, your recent paystubs and tax returns from previous years need to be supplied to the lender. In some cases, should you be retired, self-employed, or a student, other documents may be requested from you. Your steady employment is the most important bargaining tool you have to get qualified for a loan. That is why people who have been with the same employer for several years have the best chances of approval.

Finding A Bad Credit Personal Loan

Finding the best loan terms is probably the most important step. Internet search is the best once it comes to finding bad credit lenders. It is important to spend some time researching all lender offers available to ensure best rates. Under no circumstances, take the first offer, as it may cost you thousands more in interest and charges, compared to loans you may have been able to get should you have researched all possible options.