Bad Credit Loans
Trying to get a loan when you have bad credit can be very difficult. Most banks won't lend to you, and it forces you to find another alternative. Unfortunately, many of the options out there for bad credit loans are not very good ones. Many lenders are looking to take advantage of people with bad credit, and you can often end up in a worse financial situation. To help you avoid this mistake, we have compiled a short list of some of the most common types of bad credit loans, and will go over whether or not they are a good idea.
- Guarantor Loan – Don't want to use your own credit score to get a loan? No problem, with a Guarantor Loan, you get to use someone else's credit score. You ask someone, usually a close family member, to be your guarantor, and then they use their good credit score to get you the loan at a reasonable rate. Guarantor Loans can be a good way to get a decent loan, but there is one major risk. With this type of loan, if you don't pay it back, the responsibility shifts to the guarantor. Then someone close to you is saddled with your debt, and this can harm your relationship. Think carefully before going down this route.
- Logbook Loan – If you have a car that you own, a logbook loan is probably the best way to go. By using your vehicle as collateral, you can get a quick loan with a reasonable interest rate. Most bad credit lenders need to charge high interest rates since they are lending to people with poor financial track records and no insurance. With a logbook loan though, your vehicle acts as the insurance, giving the lender some peace of mind. Logbook loans are also very easy to apply for, and the money is usually delivered within 24 hours of signing.
- Payday Loan – Of all the times of bad credit loans, this is the one you need to look out for. Payday loans can sound great on paper, but they can end up causing you a lot of problems. Payday loans are meant to be over the short term, and because of this, the interest rates are very high. If you don't have a solid plan in place to repay the debt, it can quickly spiral out of control. In fact, many people need to take out a second loan just to pay back the first one. If you have any other options, we suggest taking them, as a Payday loan should be your last resort.
- Doorstep Loan – Lastly, we have Doorstep Loans. Doorstep Loans are a type of Payday loan, but they are a little better. With a Doorstep Loan, someone will come to your home with the money, discuss your finances with you, and come back to collect the payments. This gives Doorstep Loans a more personal and hands-on approach, which can be good if you are not great at dealing with finances. The person that the lender sends will be able to discuss your options with you, and ensure that you are able to pay back your loan. If you are scared of a Payday Loan, but don't have another option, a Doorstep Loan may be your next best bet.