Image Credit : Pixabay.com
By : Raam Dhakad
KYD - Personal Finance
Image Credit : Pixabay.com
When a person has a low credit score and applies for a loan, it is not unusual for a traditional bank to turn down an application.
Image Credit : Pixabay.com
Fortunately today, bad credit loans are available through online lenders, select banks and credit unions, payday lenders and title lenders.
Image Credit : Pixabay.com
If you have a low credit score and you apply for a loan that requires less credit, you must consider the pros and cons of each option.
Image Credit : Pixabay.com
Today there are many online lenders for bad credit personal loans that can provide you with a loan in no time. For this you have to apply online.
Image Credit : Pixabay.com
You can also use an online lending network to view and compare offers from multiple lenders with a single application.
Image Credit : Pixabay.com
Normally, you can view quotes without affecting your credit as it only results in a soft credit pull.
Image Credit : Pixabay.com
Some online lenders also offer pre-qualification tools on their websites that don't hurt your credit score.
Image Credit : Pixabay.com
But there is a downside that comes with online lenders. If your credit score is low, you are likely to get a higher APR, as you pose a higher risk to the lender.
Traditional banks are also another option to get a bad credit personal loan, but they may not be the best option as most lending decisions are based solely on your creditworthiness and income.
Image Credit : Pixabay.com
Payday loans are easy to get approved despite a bad credit score. Payday lenders offer small short-term loans of up to $500.
Image Credit : Pixabay.com
However, this type of loan has a significant drawback. You have to pay a hefty interest rate, often up to 400 percent.
Bad credit loans can help you break out of financial bondage if you cannot secure money from a traditional bank. They are sometimes more expensive depending on the loan product you choose.