When to Get a Bad Credit Loan
While you’re on the path to rebuilding your credit, you
still may come across a time where you need financing through a bad credit
loan. Luckily, there are reputable lenders out there who are willing to extend
you a loan. You will be required pay higher interest rates to compensate for
the perceived risk that comes with lending to someone with below average
Because your monthly payments can end up quite expensive,
it’s important to know when it’s right to get a bad credit loan and when it’s
worth waiting. This is an extremely personal decision. In many cases, however,
you can figure this out by asking yourself a couple of key questions.
Is it a true
Things like a beach vacation or kitchen renovation are
probably not an emergency and shouldn’t be funded with a bad credit loan. But
if your car is broken down and you don’t have any other way of getting to work,
then you might consider applying for financing.
Sometimes there are murky gray areas and you need to be
realistic with yourself in these situations. Say your refrigerator breaks –
that’s pretty important to replace. But do you finance a brand new $1,800
stainless steel model with a high-interest loan or do you hop on Craigslist to
buy something used but in good working condition?
Be real with yourself in determining how much you need and
for what purposes.
What are your other
Once you’ve determined that you do need an infusion of cash,
think about your other options. If you’re able to pay off a small amount with
your next paycheck, you may consider charging your emergency purchase, if you
Hit with a medical emergency and the bills are coming in?
Try negotiating a payment plan with your healthcare provider. These plans are
Get creative and at least compare your different options. If
a bad credit loan is the best one, you can feel good knowing that you made a
good plan for where you are today.
Frequently Asked Questions
What can you use a bad credit loan for?
A bad credit loan is considered a type of personal loan, which means there are few restrictions on what the funds can be used for. Check your loan agreement for details, but in most cases, there are few restrictions on how you can use your loan.
How fast can you receive your loan funds?
This depends on your lender. If you choose an online lender, you can often receive your funds within a few business days or less. When you are in a time crunch, make sure you pay close attention to your role in the loan process by signing and returning documents as soon as possible.
What’s the difference between a secured and an unsecured loan?
A secured loan is one in which you use some type of asset as collateral in case you default on the loan. An unsecured loan (or signature loan) doesn’t require any kind of collateral. A secured loan is the riskier of the two, so be sure to clarify with your lender before accepting a loan offer.
Does a bad credit loan help rebuild your credit?
If your lender reports to one or more credit bureaus, a bad credit loan could help rebuild your credit, as long as you make your payments on time each month. If you don’t, you’ll end up damaging your credit score even more. You can use this as a qualification when choosing your lender so don’t be afraid to call and ask whether or not they report to credit bureaus.
Find the Best Bad Credit Loans
Apply today to see if you qualify!