personal loans for bad credit onlinePersonal loans are very good for consolidating high-interest rate debts of credit cards. This is because the cash deposits are usually direct into your bank account, allowing you to use it for any purpose. Online lenders also make the process easier.

Disclaimer: Even with all this information, we must make it clear to you that we do not lend credit, neither do we take any credit decisions or loans. We are not affiliates of any lenders or brokers, and therefore we are not responsible for the actions of any lender towards you.

 

Why is it hard to access credit without having a bank account?

 

The reasoning is simple – lenders are afraid that you will not pay them back. Do not mistake credit loans without credit checks as less of a worry – the lenders still need assurance you will pay them back their money.

 

Getting a lender for best personal loans

 

bad credit personal loans

 

The complexity of credit cards is high, but personal loans are simpler things to handle. They allow you to borrow fixed amounts of money for set periods, and this means that the interest rates are also set. You can know the interest rates before you sign the contract, while you get the proceeds in cash (usually instantly).

 

Advantages of personal loans

 

  • You get your proceeds in cash, and you only use a credit card where it is accepted. This can help in situations such as home improvement where not many contractors accept credit cards.
  • Application processes are easier and take less time. All you need to do is fill out a short application form (meaning that it makes it easy to finish everything online). It uses a ‘soft pull’ approach, meaning that your credit score is not hurt. You can also see your interest rates, as well as the amounts you can borrow. That implies ease in comparing different offers from different lenders and get the best deals for your situation.
  • Compared to credit cards, interest rates are lower (usually). Even your credit rating can reduce the interest rates that you pay – but that does not disqualify individuals with lower credit scores.
  • The debt is smaller and you do not have it for a long time – credit cards have people paying only the minimum dues, but for personal loans, the period is shorter.
  • Personal loans can make your credit score higher. This is particularly if you are paying any existing credit card liabilities. In fact, FICO scores (a type of credit score) uses different types of credit sources, and the better you pay up, the higher your credit score becomes.
  • Prepayments do not lead to any penalties
  • Lenders that provide small personal loans are more accepting of people with lower credit scores, compared to credit card providers and financial institutions.

 

Disadvantages of personal loans

 

best personal loans for bad credit

 

  • Interest rates vary depending on your personal credit score. For instance, borrowers who have credit scores below average, end up paying very high rates. However, they are good for short-term financial emergencies.
  • The up-front fee is non-refundable. If the loan has a fixed charge and you pay early, annual percentage rates end up becoming higher and you pay more.
  • Once you finish paying off the debt, the chances of you using your credit cards again is very likely. This could be dangerous for your financial status.
  • Personal loans lenders ask for income verification in many cases. They can also ask for employee verification. Because of this, the chances of you getting your personal loan are slower than an application for credit cards.

 

Getting best personal loan rates from the following sources:

Online Lenders

These are among the best places to get a personal loan. The competition among all the online lenders is high, so they attempt to set themselves apart from traditional lenders. Some of these ways include flexible payments or reducing your interest rates or total fees.

Other lenders deal with borrowers that have less than average credit scores, even though the rates may be higher the lower your credit score is.

 

Banks

chase personal loans for bad credit

Generally, this is not a good option; because you may not be able to check interest rates without lowering your credit score, (inquiries can result in lowering your score by ten or more points). Banks have stricter requirements for dealing with loans, in addition to higher interest rates.

 

Credit unions

These are a better option than banks when it comes to personal loans best rates. This is mostly due to their lack of shareholders in most cases, and their members own them. The drawback to them is that you can only apply when you are a member.

 

Avoiding debt traps

  • As much as possible, avoid the cycle of eternal debts. Maintain a sense of wisdom concerning your financial state, stay away from the temptation of borrowing more than you can pay back immediately, and do not harbor false expectations about your income source.
  • Ensure that you check and verify the laws of your state regarding the issue of personal loans, since there may be restrictions on the amount of money that the law allows you to borrow.
  • Understand all the terms and conditions in the contract
  • Drawing up a budget
  • Avoid payday loans whenever possible
  • Avoid co-signing loans – this is equivalent to taking on the debt as your own. When your partner fails to foot the bill, there are defaults in the payment, because this can damage your credit ratings ultimately. If you choose to co-sign a loan, ensure that you have the ability to pay off any debts that arise.

 

Final thoughts

Personal loans are good options, even for people with bad credit scores. There are many providers of the service, though the best place to borrow from is online lenders because of their flexible terms. 

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