Having good credit makes it easy for one to acquire a loan. Unfortunately, this is hard when your credit score is poor. It does not, however, mean that it is not possible for you to get a loan in such instances. Some lenders are willing to risk by giving bad credit borrowers loans to handle emergencies. Before you approach any lender, you should know the different types of loans you can get when your credit score is wanting and gauge the options for you to choose the most ideal.
The first option is applying for a payday loan. This type of loan acts as an advance to your next paycheck. For that reason, some people call it a cash advance. Though you can obtain a payday loan from a brick and mortar storefront, some online lenders offer this. You can only borrow a small amount in this case and repay it after a short duration. In most cases, the repayment term of a payday loan is two weeks, and you have to make the payment once clearing out the total amount borrowed plus interests.
For you to get a payday loan, you will be required to make a postdated check. When the payment date is due, the lender can automatically cash out the funds owed from your account. Payday loans come with a flat fee of about $ 15 for every $100 borrowed. It means that if you borrow $ 200, you have to repay $ 230. The flat rate, in this case, is the $ 30, which acts as the interest rate. Making early payments for a payday loan will not save you anything. Most people find the interest rates of payday loans too high, considering the duration of payment.
If that’s not an ideal option for you, you can look into title loans. This is also a short term loan ideal for people with bad credit. It is different from a payday loan in that it is secured. You have to give up your car or truck as collateral for a title loan. The collateral lets you borrow a high amount since you reduce the lender’s risk. You can also get low-interest rates attached to the loan. Before choosing this option, ensure you have a plan on how to repay it to avoid losing your car since the lender can repossess it if you default on payments.
You can also borrow a loan from a pawnshop. In this case, you have to submit a valuable asset as collateral in exchange for a loan. The amount that you can borrow from a pawn shop depends on the value of your item. The terms of this loan depend on your location and state laws. Do your homework before choosing this option so that you can find out the rates that different pawnshops offer borrowers. You should try and make consistent payments on your loan to avoid accumulating high-interest rates. Also, start working on enhancing your credit score for future purposes.