It’s not true what they say! You can get a personal loan even if you have bad credit.
Don’t let poor credit stop you from getting the loan you need. There are a lot of lenders prepared to offer you the best personal loans for bad credit.
We’ve got all the information you need to consider when looking for a lender.
Tips for Finding the Best Personal Loans for Bad Credit
It is possible to get a personal loan with bad credit. However, you do need to do some additional research to ensure you aren’t making your financial situation worse. Here are 4 things to look out for when looking for the best personal loans for bad credit.
1. Your Credit Score
According to CNBC, the average FICO score (one of the most common scoring systems) rose to 704 in 2018. While your score might not be that high there are steps you can take to improve it.
The first thing you will need to do when considering a personal loan is to learn your credit score. There are many different ways to do this. We’ve compiled a list of the best ways to check your credit score for free.
Once you’ve found out your credit score you need to take steps to improve it. Pay off debts you are able to pay off and avoid accumulating new debt. Check your finances regularly, keep on top of your outgoings and be sure to dispute any charges or payments you think are incorrect.
2. Don’t Settle
You might think that, with your bad credit, you will have to settle with the first company who offers you a loan. You’d be wrong.
There are options out there for you. Be sure to thoroughly compare the market. There are some key criteria you want to be on the lookout for.
- Required credit score – Some lenders require you to meet a minimum credit score to be considered for a loan.
- Interest rate – The interest rate will vary depending on a number of factors, including your credit score, down payment (in the case of mortgages, etc.), and loan type.
- Loan term – How long is the payback term for the loan? A longer payback term for a loan, combined with high-interest rates could see you paying significantly more than the value of the original loan.
3. Be Careful With Subprime Loans
A subprime loan is a loan offered at non-prime interest rates. According to CGTN America, a subprime loan will come with interests rates that are at least 2% higher over prime rate loans.
If you cannot pay back the loan, the lender will usually have a collateral arrangement written into the terms. If you default, lenders can take away your car, appliances or anything totaling the sum of the missed payment/payments.
Subprime loans can seem like a last resort to those refused loans from other lenders, but weigh up your options very carefully. Look at your financial situation and consider professional advice.
4. Know Your Numbers
Shop around the market and look at the average interest rates for your loan amount. Interest rates for personal loans range between 5 and 36%. You want to aim for a low-interest rate, but keep in mind the loan term, as we’ve mentioned.
For example, if you borrow $10,000 at 5% interest rate paid back over 10 years your total interest payment will be $2,727.86. Whereas a $10,000 at 20% paid back over 2 years results in a total interest payment of $2,214.99.
A low-interest rate does not always equate to best value. Take your time to assess lenders and find the right loan for your financial situation.
The Bottom Dollar
If you are shopping for the best personal loans for bad credit then be sure to research, work with a specialist and carefully weigh up your options before you borrow. Our online blog offers a wealth of financial advice.
Don’t see your favorite tip here? Maybe you need some advice? Visit our learning center or reach out and let us help you.
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