So, you need a loan but have bad credit?
Don’t get too stressed. If you have some collateral, you can obtain one of the many secured loans for bad credit that are on the market, and your terms will be far more favorable than those offered to people who have no collateral.
Don’t just take any secured loan
Here are a few pointers to help you in your search for the best loans:
- Take a little time to identify your collateral, so that you have some ammunition as you talk to the lender. This can be anything from equity in your home to a car that has been paid off.
Have any savings accounts? Those help, too, as do life insurance policies. Secured loans come in many forms, from a home equity line of credit to auto loan refinancing. The type of collateral that you have will dictate your options.
- Set aside a lot of time to shop around for the best secured loans, starting right here. That means interacting with online lenders, as well as local banks and credit unions.
If your poor credit is due to what is termed a “unique incident” (divorce, high medical bills, etc.), you will have a better chance at getting a loan, especially if you can prove that you are bumping up your score by the day.
- Do your due diligence as you compare secured loans for bad credit. Look beyond the proposed interest rate to see what other fees apply, find out what restrictions will be placed on your property if you offer it up as security, make sure that the lender reports to credit bureaus so that your payments can improve your rating. Car title loans are usually the worst of this lot; home equity loans the best.
- Before signing any contracts, be sure that the terms match what you were told orally, and don’t be embarrassed about asking any questions. You must understand all of the details of this document—your financial future could be on the line!
If you have an asset or two, your chances of securing a loan improve dramatically, even with bad credit. If you are in a financial bind, reflect on what you do have so that a lender will be more inclined to take a risk on you. Be certain that you can make the payments on your new loan, or even the few assets you had will be lost if you default.