The common notion is that if you have bad credit, you are probably only making your situation worse by taking out a bad credit personal loan from a loan company. Bad credit personal loans do have rather high interest rates for two reasons. Primary among them is that the borrower has bad credit. That represents a risk to the lender. Personal loans are not backed by any collateral or security; that too represents risk for the lender.
Having little recourse in making good on defaulted loans, lenders must offset the cost with high interest rates. In spite of the high interest rates, those who take out a legitimate bad credit personal loan from a reputable company do not necessarily make their situation worse. If they are careful and wise, they may even ameliorate their financial circumstances. If you are in the market for a legitimate bad credit personal from a reliable company, you need to consider a few things.
What do you need? What can you afford?
You need to have a solid budget measuring your income against your outgo. What is left after you pay all your normal monthly obligations? How much of that can you comfortably use to make a monthly payment? How much do you need to smooth out the financial wrinkles? The biggest mistake many people make is borrowing more than they really need. If you already have bad credit and you are already carrying a debt load, you should not be borrowing anyway. But, things happen. You need car repairs to get to work. A new prescription might cost a lot.
Three things you need to consider when seeking a lender
Common sense and gut feelings are legitimate judgment calls when dealing with lenders. You certainly do not want to get sucked into a situation where you divulge your identity or financial information only to have the so-called lender disappear. So, you will need to take some other things into consideration.
One: Do not automatically view advertisements as legitimate. Banners or text links promising to approve loans instantly without credit checks or collateral are not always what they seem to be. They could be outright scams or they could be come-ons for different sorts of loan products, usually payday or cash advance loans which are not exactly bad credit loans.
Two: Before you start dealing with a lender, check their Better Business Bureau (BBB) listing. You can find these BBB listings online and they give ratings and customer feedback. You will never want to choose a lender whose BBB rating falls below the B status. BBB ratings have been a standard for all kinds of businesses, not just loan companies, for generations.
Three: If the BBB listings do not have a listing for the lender you are considering or if you just want more information, you should check online personal finance forums where you may find feedback or blogs on particular lenders. Whether or not you end up dealing with a certain lender, if you feel they are operating fraudulently, do not be afraid to report them to the Federal Trade Commission (FTC), you may help another person in your situation.
Online lenders may be your best bet
No matter what you do, you will always want to shop for the best interest rates and repayment terms. The internet provides that opportunity. Brokers are available online and they usually only have networks - but not guaranteed - of legitimate lenders. By giving these brokers some general information, they will reward you a list of lenders most aptly to execute a bad credit personal loan in terms of the amount you need, the interest rates you want to pay, and repayment terms that will fit your budget and your comfort zone. Just be careful.