Bad Credit, No Problem: 5 Online Loans for Folks with Low Credit Scores
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Given their popularity, it’s safe to say that many people already know about instalment loans. These loans are well-favored today because of their simple and fast application process. That’s not surprising since convenience attracts people. In fact, you can apply for a loan online through your laptop or smartphone.
Online loans are also beneficial for borrowers with poor credit scores. Unlike traditional lenders, many online lending companies provide loans to high-risk borrowers. Credit scores don’t matter as much as your capability to pay back what you owe based on your monthly income.
If you badly need to borrow some cash and your credit score makes it hard for you to get loan approval, go for online loans.
Online Personal Loans
Personal loans are a pretty popular type of loan. Banks and credit unions offer personal loans, and online lenders are also following suit.
A borrower can use an online personal loan for many purposes, such as vehicle repair, minor house renovation, debt consolidation, etc. This loan has a fixed monthly payment allowing borrowers to determine the amount they have to pay every month and budget their debt payment efficiently.
Today, many online lending companies provide low-interest rates for secure online loans. However, you need to be wary of the fees associated with your loan. Make sure to ask the lender for any origination fees and prepayment penalties.
Bad credit borrowers can also avail of personal loans offered by online lenders. If you have a stable job and receive a certain income amount every month, you can qualify for online personal loans despite having a low credit score.
Peer-to-Peer or P2P Loans
Despite your bad credit rating, peer-to-peer lenders can allow you to borrow some cash. P2P lenders operate through a peer-to-peer network. It means that you can take out loans directly from individual lenders with no middleman. This gives freedom to lenders to accept loan applications even from borrowers with bad credit.
P2P lenders can also provide loans with affordable interest rates to high-risk borrowers. If this looks enticing to you, browse the web now and register to a P2P network that offers bad credit loans.
Guaranteed Payday Loans
Payday loans already have a bad reputation among consumers. For sure, there are many people that are so repelled with payday loans that they won’t read an article talking about them, let alone about their being beneficial for borrowers with low credit scores.
While there’s some truth to the negative information spread about payday loans, it doesn’t mean that such loans are a bad case altogether. Yes, it’s true that some payday lenders prey on unsuspecting borrowers. They charge high interest rates that put their borrowers into a miserable debt cycle. But not all payday lending companies are predatory lenders.
There are online payday lending companies that follow the rules. Take Friendly Lender for example. They provide loans to customers at reasonable rates.
Many state governments now regulate the operation of payday lending to ensure that lenders don’t take advantage of desperate borrowers. Payday lenders are now prohibited from lending more than $1,000. Interest rates are also limited at no more than 36%.
Yes, online payday loans still have higher interest rates than other loans, but people with low credit scores go for online payday loans because of the moderate credit requirements.
Just make sure that your lender sticks to government rules in their payday lending operations. It’s one way to keep your money safe.
Online Small Business Loans
Online lenders offer small business loans. The good news is that you can take out a loan for your small business from online lenders despite having bad credit. So, if you have plans to set up a new business and you don’t have sufficient funds to start its operation, you can borrow money from an online lender.
Another great advantage is that you can avail of a low interest rate or a larger loan amount if your business idea is economically feasible.
Guarantor Loans
A guarantor loan can be taken out even if you have a poor credit score. But you need to have a guarantor who has a good credit rating that will guarantee your loan. If you can’t pay back your loan, the guarantor will shoulder the remaining payments. While this really sounds good, the hard part is looking for a guarantor.
Takeaway
It’s not the end of the world if your credit is not that good. While it’s hard to get a loan from banks in your credit situation, online loans can save the day for you. Consider getting an online personal loan, P2P loan, online payday loan, guarantor loan, or an online small business loan if you want to borrow money while having a bad credit score.
