There are many companies who specialize in personal loans for people with bad credit. If you have had a bankruptcy, a repossession, or other negative factors on your credit report, the bad marks will probably not be an obstacle for you getting approved for a bad credit personal loan. These loans come two flavors -- secured and unsecured. Understand though, these bad credit personal loans will carry interest rates higher than the standard rates because of the risk involved with lending to customers with poor credit histories.
Your Unsecured Bad Credit Personal Loan
As noted, personal loans can be unsecured loans. No collateral, such as real estate, stocks and bonds, even a late model car, is required to secure the loan. With minimal documentation an unsecured loan is approved based on employment and a valid checking account with direct deposit. No formal closing is necessary, since there is no property is involved. The process is very vast. Once the application is completed and the loan is approved, the cash can be in the bank account of the borrower within 24 hours.
Your Secured Bad Credit Personal Loan
Secured loans require a bit more processing. Whoever is borrowing must have real value property that is equal to or exceeding the sum of the loan. For instance, a home, other real estate, a business, stocks and bonds, even a late model car may be accepted as collateral. A home, other real estate, a business, or other property with equity, are often eligible for a home equity line of credit, often called a HELOC. You would be given a slice of the equity value of the property. However, some lenders allow home owners to exceed the value. A good thing about a HELOC is that interest rates are lower, much like a revolving line of credit. For late model cars, the loan is based on the value of the car. If you have bad credit this is a good way to get cash fast. However, if payments are missed, the car will be repossessed.
Your Unsecured Pay Day Bad Credit Personal Loan
Another way to get cash fast for bad credit borrowers is the pay day loan. You have probably heard rumors about pay day lenders charging usurious interest rates for these loans. The annual interest rates are high and the sums of money received are small. But, these lenders are regulated in over thirty states and these loans have become a handy way for folks with financial emergencies to get their hands on quick cash. The regulations have capped annual fees and interest rates are capped and vary from state to state. You can get these loans very quickly and very easily. But, the loan must be paid by the following pay day, usually within fourteen days. However, the bad credit borrower can extend the terms to 30 days, but additional fees may be incurred.
Your Qualifications for a Bed Credit Personal Loan
Before you go shopping for your loan, have this documentation, even if you are applying for a loan on line. These documents are usually sent the lender via fax or scan. You will need:
- Two government issued identification document, such as a passport, a driving license, state identification card, etc.
- Steady job, the lender likes to see that you have been working steadily for three to six months. This can be proved via pay stubs or direct deposit statements.
- Decent salary, the lender wants to know that you have enough money left over to make your payments after you pay off your usual monthly obligations.
- Valid checking account with direct deposit, this can be proven with bank statements and account numbers.
- Proof of residence, the lender needs to know where you live. This can be proven with a utility bill.
Once you get through with these formalities, you should have your much-needed cash in your bank account, often within 24 hours, maybe sooner.