You can get a bad credit history if:
- You make a late payment
- Default on a loan
- Miss scheduled payment
Getting a loan with bad credit might look hard to accomplish, but it's certainly doable. There are many lenders specializing in bad credit loan lending (frequently called sub-prime lenders). There is a catch though – when getting a loan with bad credit you will be paying higher interest rate compared to a borrower with pristine credit history. This simply compensates the lender for the risk of loaning money to a bad credit borrower. Another thing to consider when applying for bad credit loan is that the maximum amount you can borrow will be less compared to as borrower with a perfect credit.
There are 2 types of bad credit loans you can get – secured bad credit loan and unsecured bad credit loan:
- A Secured bad credit loan is simply a loan given to somebody with a bad credit, which is secured by an asset owned by the borrower. If you apply for a loan with bad credit and you own a house, you can get a bad credit loan and use your house as loan collateral. You can also get a secured credit card, which will be secured by a cash deposit.
- Unsecured bad credit loan is the second type and to be honest with you chances to get an unsecured loan with bad credit are slim to none. A bad credit borrower who doesn't have collateral represents a great risk for the lender, hence the difficulty in obtaining a loan with a bad credit in this case.
If you are approved to get a bad credit loan, you will have the chance to repair your damaged credit history by making regular on-time payments towards your loan. If you look at your bad credit loan as your ticket to a good credit history, then you'll do just fine.
Low Interest Loans are loans with low interest rate. And as a consequence of low interest rate, the monthly payments are low as well. There are several types of low interest loans. There are personal loans with fast processing loan applications. The smallest amount that you can loan is $1,000. Students can also avail Low Interest Loans to finance their education. Programs such as Direct Loans are designed for tuition fees. For loans involving large amount of money, you can choose Home Loans, Home Equity Loans, Home Improvement Loans and Homeowner loans. These loans have competitive rates because they are secured. To avail any of these loans, you need a property to secure the loan. The property will serve as collateral of the loan. The presence of collateral can have a great impact on the interest rate of the loan and the amount of loan approved. The properties that you can pledge against the loan include but not limited to real estate, vehicles, stocks, bonds and jewelry. The risk of secured Low Interest Loans is the tendency of property foreclosure in case you default on payment several times or when the lending institutions have established your nonpayment condition.
Besides having collateral, few other factors are taken into consideration to have a Lower Interest Loan. Your Credit History plays a crucial role. People who have an impressive credit score have higher chances of getting a Low Interest Loan than those whose credit score is hurting. Banks and other lending establishments look into your capacity to pay. They are curious whether you can meet the monthly obligations to them. To satisfy their curiosity, you may be asked to provide several documents such as the latest pay stubs, tax returns, financial or bank statements, and a draft of your monthly expenditures. The loan officer will evaluate your regular monthly income against your monthly expenses. In addition, the choice of your payment term also determines the rate of your interest. The shorter the loan term, the lesser are the interest that you should pay. If for instance, the borrower has a bad credit history, he can still avail the secured low interest loan. Although the rate is not as low as the one given to a borrower with good credit score, it is still considered a Low Interest Loan in light of having collateral. The variety of loans can be confusing at times. Before you decide on the type of loan you will apply, it is best to understand the program from all angles. Review the terms of payment, the non-payment clause and the risks involved. You have to understand that while the loan you have obtained has low interest, it can be void if you fail to pay on time. Some banks and lenders are really strict in payment. If you failed, you are likely to pay additional charges such as surcharges. Shop online.
The first quotation that you have received may already have low interest; however, it is still wise if you consider other offers.