Financial emergencies are often unpredictable and demand vast monetary sums to be paid on priority. However, you might not always have a cash amount worth the requirement at your immediate disposal.
Under these circumstances, if you haven’t kept your credit score under check, a bad credit loan might be your best savior! Banks and financial institutions grant these as cash loans on an urgent basis to debtors with a bad credit score, usually below 750.
This blog aims to help you get a loan with bad credit when needed. For further assistance, check out our bad credit personal loan guarantee approval options for up to $5000.
What is a Bad Credit Loan?
To understand a bad credit loan, you must first know what “bad credit” means. If you’ve ever taken a loan or credit card from a bank or financial institution, your ability to pay or clear your dues gets tracked.
Several parameters are considered, such as the amount you owe, the promptness of your installment payments, and the duration you hold the credit for. Based on these, institutions assign a credit score that accurately reflects your creditworthiness.
If this score falls below 600, getting another loan during financial urgencies becomes challenging. However, institutions like us help you secure a personal loan for amounts ranging between $50 to $50,000, even in these tough times, through effective loans for bad credit options.
These include bad credit personal loans, payday loans, credit union payday alternative loans, cash advances, and home equity loans. They may be secured or unsecured based on your needs, indicating that you may or may not need to offer collateral as a guarantee.
Compared to traditional loans, bad credit loans are granted quickly, considering they are often needed for emergencies. No prior credit checks are done.
However, lenders may charge a higher interest rate or reduce loan amounts to compensate for the risk associated with bad credit. Unlike traditional loans, loans for bad credit can be used for multiple purposes, such as medical emergencies, paying off overdue debt, or pursuing higher education.
Step-by-Step Guide to Getting a Bad Credit Loan
Follow the steps below to get a loan with bad credit, simplify your loan application and approval process, and make the entire experience quick, easy, and hassle-free.
Check Your Credit Report
Check your credit report to ensure you qualify for a bad credit loan. According to Radcred’s analysis, a credit score below 750 is optimal.
Additionally, it helps if your credit history shows delayed yet successful payments and your bank account shows consistent, high-income gains. This allows the lender to feel secure about your repayment promises.
Determine How Much You Need
The next step is determining the loan amount you need, depending on the financial emergency for which you’re borrowing it. The good news is that there are no restrictions on the purpose of use. You can use the entire amount for single or multiple purposes based on your personal needs.
Research and Compare Lenders
Further, doing your homework and comparing the loan terms different lenders offer is essential. For instance, Radcred provides a guaranteed $5000 bad credit loan without prior credit checks.
However, this amount can also be up to $50,000. You can also choose the loan duration according to your convenience, with an APR ranging between 6% and 36% based on your credit history.
Gather Required Documentation
Your loan application will be incomplete without accurate documentation to prove your cause. Standard documents you may need include a government ID, age proof (18 years or older), current address proof, employment history, steady income proof of at least $800 per month, and collateral documents if you seek a secured loan.
Apply for the Loan
Once the documents have been collected, you can complete the loan application and submit it with your correct and detailed information. The lender will view your application and decide whether or not they can grant you loans for bad credit, and if so, for what amount, duration, and interest rate.
In the meantime, you can wait for the lender to communicate the approval and loan terms through its official channel.
Receive Your Funds
Once the loan applications and terms have been approved, you will instantly receive the loan amount in your bank account. Unlike traditional loans, bad credit loans are quickly released, considering the unprecedented circumstances they must cater to.
What to Do When Your Loan Application Is Rejected?
Loans for bad credit are considered risky, as banks and financial institutions lend to people with a proven history of delayed or unsuccessful credit repayments. Therefore, your application may be rejected.
But there’s no need to worry! You can make a few amends and immediately increase your chances of receiving bad credit loans. For instance, you can pay a few outstanding bills and uplift your credit score. Additionally, you can add a guarantor or reevaluate and lower the loan amount you’ve applied for.
You can also reconsider the loan duration and promise to repay within a short period to increase your chances of approval. Nevertheless, there are a few alternatives available that you can try out. We’ll discuss those later in the blog.
Pros and Cons of Bad Credit Loans
Loans for people with bad credit can be equally desirable and risky. The key lies in understanding its pros and cons to secure the required amount as a loan without any negative impact on an already low credit score. The fine line needs to be balanced!
Pros
- Loan applications are likely to be accepted as there are hardly any minimum credit score requirements.
- Instant loan disbursement in cash, ideal for financial emergencies
- Amount can be used for any purpose
- Help repair your credit score if you make on-time installment payments
Cons
- Higher interest rates
- May require collateral for security
- Fixed loan repayment terms
- Using a bad credit loan to pay off another debt may tie you into a debt repayment loop and worsen your credit score.
Alternatives to Bad Credit Loans
If you are actively struggling to secure a bad credit loan, here are a few alternatives you can try. These may be hassle-free and help you get a faster loan, with or without a collateral at stake.
Credit Cards
Credit cards offer one of the best alternatives to loans for bad credit. You can use the card to pay for small expenses in a cashless manner and repay the amount within more or less 30 days.
However, the interest rates may be relatively high. Additionally, qualifying for the credit card application process is challenging in the first place.
Title Loan
A title loan is a secured loan in which the debtor receives instant cash against the title of a collateral, usually a vehicle such as a truck or motor car. If he fails to pay the amount on time, the collateral is transferred to the lender.
The usual time allocated for repayment in most cases is 30 days. However, the lender may grant an extension at the lender’s discretion. Moreover, the interest rates are sky-high.
Pawn Shop Loan
Like title loans, where you get instant cash against a vehicle’s title, pawn brokers offer pawn shop loans against other valuable collaterals such as jewelry, branded accessories, electronic goods, machine tools, and musical instruments.
The repayment period is usually 30 days, extendable to 60 days if the pawnbroker agrees.
Peer-to-Peer Loans
One interesting alternative to loans with bad credit is peer-to-peer lending, where one individual grants credit to another on platforms that facilitate the same. We have several P2P lending websites where you can enroll as a debtor, create your financial profile, and receive loans based on your creditworthiness.
The interest rates are relatively low and decided based on your credit history. For transparency, the transfer of payments and repayments is administered by the P2P lending websites.
Bottom Line
A bad credit loan can help you deal with immediate financial urgencies with quick cash at your disposal. The application process is easy and hassle-free. However, you need a few things in mind.
According to our analysis, your credit score should be below 750 but not so low that your repayment claims cannot be trusted. You should have a valid American bank account to receive the loan amount and pay in installments promptly for your preferred duration.
Having a guarantor or offering collateral may help you secure a bad credit loan. For further help, contact Radcred and get guaranteed bad-credit personal loan approvals for $5000.
