If you have a bad credit, you can still manage to find a lender who can give you loans at a flexible fee. The lender must be willing to look beyond the credit score. However, you need to be careful so as not to avoid common scams and predatory lenders.
It is true that credit scores will affect the rate at which the lenders are willing to lend their money. In addition, the loan may be capped at a lower amount so as to reduce the risks. In most cases, the rates for such loans will be capped at 20 %. The lender may also want to be certain that borrower will actually pay the loan.
Loans Available for Borrowers with Bad Credit
Loans for bad credit range from personal loans to home loans to payday loans.
Personal loans for bad credit may be available in credit unions, online lenders and brick and mortar banks. The amount each lender parts with varies widely and may be based on how bad ones credit is. It also depends on whether the loan is secure or unsecured. Secured loans are backed with collateral. Accessing such loans from credit unions is recommended since credit unions offer better terms, are more flexible than big banks.
Mortgage Loans for People with Bad Credit
It is also possible to get a mortgage even if you have a bad credit. However, your choice and the amount may be limited. Working with mortgage brokers can help you evaluate options available. They will also help you secure loans with adjusted rates. In some cases, the loans may be backed by the government and hence may be availed at competitive rates. Note that one may be required to make a down payment of between 3.5 % down payment if the loan is secured by the government.
Bad Credit Auto Loans
These are simple auto loans meant to help buyers with bad credit access funds to buy a car at favorable terms. Many lenders may focus on the bad credit and may want to take advantage of the bad credit customers and prescribe unfavorable terms. However, the rule is that you should not pay interest in double digits or sign up for loans whose period of payment is more than 5 years.
Payday loans are the most common credits for people with bad credit score. They are normally small, and should be paid back on the next payday.