The Benefits to a Low Interest Bad Credit Loan

A low interest bad credit loan offers the borrower numerous benefits. By having a lower interest rate the borrower can save hundreds and up to thousands of dollars over the term of the loan. Low interest loans are secured by collateral such as a home, a vehicle or any other type of valuable property.

The more valuable the property is the more money the borrower can save in interest payments towards the loan. To receive the best deal on a low interest loan the borrower needs to have a high valued collateral to secure the loan with. With better collateral backing the loan, the lower your monthly payments will be.

People who have a bad credit score do not need to feel like they cannot get approved for a loan any longer. They too can get a low interest loan but it will be slightly higher than those who have perfect credit. Quite often it is the collateral being offered that will make the final determination of your annual percentage rate.

Reasons For Wanting A Low Interest Loan

There are many reasons for wanting or needing a low interest bad credit loan. A lot of time the borrower will use the low interest loan for home renovations that will raise the value in their home such as bathroom or kitchen remodeling, a new roof, or finishing their basement. Other reasons include debt consolidation for a lower monthly payments and sometimes emergency medical bills. You can use a bad credit loan for a new car, a wedding, college, vacation or any other personal desires. No matter what the reason is for getting a low interest loan, it is bound to save money for the borrowers.

Where To Look To Apply

There are numerous places to look for this type of loan. A lot of the time people will decide to go the more traditional route, which is through a well known personal lender, whether it is a bank or financial institution. This can offer some peace of mind for many, although having to deal with these kinds of lenders can be quite the hassle for busy people. Going with the in person lender, you require a physical appearance which can be difficult to someone with long working hours, or family commitments. This also requires substantial amounts of paperwork, and a longer wait time for the approval.

The easiest way to apply for this type of loan is through the Internet. Online lenders offer low interest loans with an easier system of shopping around. Borrowers are able to search their website for free online quotes, advise and even loan tools to help find the best loan available to them. You can apply to multiple lenders at one time.

Online lenders provide the tools that the borrowers need and information to help get a low interest loan with affordable monthly payments that they deserve. Bad credit loans not only help with getting the money for things they need but these loans also help the borrower get their credit score up. This is a major benefit for those who have less than perfect credit.

Bad Credit Personal Loans – What to Avoid

If you have bad credit and are deeply in debt, you should try to avoid bad credit loans. However, if you are in a situation where you must borrow even if you have bad credit, there are five pitfalls you should look out for.

1. Payday Advance Loans.

Payday loans are the most readily available and are potentially the most damaging type of loan you can obtain. Once all fees are calculated, some payday terms have you paying as much as 400% of interest each year.

With these types of short term loans, your ability to pay it back may not be as easy as it initially appears, and the temptation to renew the terms is strong if your financial situation has not changed. This can lead rapidly to a vicious cycle of borrowing to pay the interest owed, and eventually you are “robbing Peter to pay Paul.”

2. Car Title Loans.

These types of loans carry close to the same exorbitant rates as the payday advance loans, although car title loans come with the added danger of losing your vehicle at the end of the process. This kind of borrowing should be assiduously avoided, as the prospect of losing your vehicle can often result in the loss of your job as well.

3. Secured Loans using personal possessions as collateral.

Secured loans require collateral in exchange for bad credit loans. These companies will place a lien on any collateral you present, and can gain possession of that collateral if you default on your loan. These borrowing terms are near identical to title loans in that they have high interest and acquisition fees.

4. Loans that require multiple references.

In most instances, bad credit loans will require that you provide a list of multiple references at the time you apply for the loan. A reputable company will likely ask for no more than three or four references; anything more is considered excessive by some. Please note that if you default on your loan repayment plan, these companies will contact your references directly in an attempt to reach out to you.

5. Loans that encourage you to give false information.

These types of bad credit loan companies offer their loans with disproportionate high interest rates and use questionable, often harassing collection tactics when necessary.

The agents at these bad credit loan companies tend to earn a commission on each borrowing contract they write. This gives them an incentive to write as many loans as possible. After defaulting on your loan and/or renewing the loan several times, the charges you incur may well exceed the amount you were lent. This is how these types of bad credit loan companies make the bulk of their money.

Please beware of those few agents working with predatory lenders that will make false statements on your loan application, by inflating your monthly income and qualifying you for a loan you would not otherwise qualify for. Remember to ALWAYS read and verify all contract information before executing the legally binding contract agreement.

In conclusion, if you have bad credit and are in need of a loan, please take a moment to review your various options. Hopefully, you will find the information contained here useful. If at all possible, steer clear of unscrupulous lenders that can ultimately cause you more harm than not.

Does Guaranteed Approval for Personal Bad Credit Loans Really Exist?

The average consumer is bedeviled by these recessionary times and often is looking for a shortcut to solve their financial difficulties. The promise of a substantial loan with guaranteed approval, even for those with bad credit, may be a rather enticing quick fix.

Certainly on the internet and in web blogs, but also on billboards, on fliers, or in newspaper classifieds, one can always find advertisements from lenders offering guaranteed personal loan approval for all applicants, no matter how bad their credit. Before you even contact such a lender, there are some things that you should know.

The Credit Check

Even though these private lenders push the fact that they will grant loans no matter what your credit score, most will still run a credit check. They will probably refuse you if your credit score is critically low. Should that happen, the lender will probably suggest getting a cosigner.

A cosigner is usually a trusted friend or family member who is gainfully employed and has a better credit history than you do. (The cosigner should realize that by signing onto the loan they are liable for any unpaid amount should you default for whatever reason.) The lender will certainly run a credit check on your cosigner.

Guaranteed Loan Approval Is a Fantasy

Face it, if any lender guaranteed a loan to each and every applicant, that lender would not be in business very long. Also, do not be tempted to call an 800 number for easy access to a guaranteed loan. This is probably a ruse to get you to pick up the phone and call the lender so a person can gather all your vital statistics and then ask for an upfront fee.

Legitimate lenders do not approve loans over the phone; that is against the law. Some sort of contract or documentation, electronic or paper, must be shared between the lender and the borrower. Legitimate lenders will not ask for an application fee upfront. Fees should only accrue once a loan has been granted.

The Better Business Bureau Points Out Risky Business

Before approaching any lender, it would be wise to go to the Better Business Bureau (BBB) and check up on the lender. If you cannot find the lender in the BBB business directories, you should not be doing business with that company.

Once you do find a lender in the BBB directories, you will see a rating from A to F. Stick with the A-lenders. You will see a profile of the company. You will see customer satisfaction testimonials. You will find full contact information.

Fly Paper Marketing for Guaranteed Loan Approval

Offering guaranteed approval is a marketing gimmick to get you in the door, so to speak. Like flypaper, once you land, you are probably stuck. Once an unscrupulous lender has you on the phone or filling out applications, they have done half the job of getting you to purchase one of their loan products.

They are often successful because a poor credit applicant comes to feel like the lender is doing them a favor. Always remember that you are doing the lender a favor by offering your business. You are the boss. Do not deal with condescending lenders who make you feel bad about your poor credit history.

Guarantee Yourself Against Bad Lenders

Remember, guaranteed approval for a bad credit personal loan is never 100% true. Check with the BBB to learn crucial information about the lender. Do not agree to anything over the phone. Do not pay any upfront application fees. Do not deal with a lender who makes you feel like they are doing you a favor or makes you feel needy and uncomfortable about your credit history. Armed with this information, you will probably find a decent lender who can accommodate your financial goals.