Need cash? Here are some solutions for those with bad credit
Those looking for a personal loan for bad credit have several options to explore. Three of the most popular are credit cards, home loans, and personal loans for bad credit. The money received can be used for many reasons to include buying jewelry or upgrading a business. The best type will depend on your intended use and personal financial situation.
Here’s a little about each type to help everyone make an informed decision when they decide to look for a bad credit personal loan.
Personal loans
One can get a personal loan from most banks. As stated above, they can be used for almost anything and are based on being able to provide proof of income as well as assets. These assets must be worth the amount the person is borrowing. It is a quick application process when these things are in place and accounted for and the applicant will know within a few days if they are approved.
The main disadvantage is that the interest rates are usually high around 12% on average. Repayment terms vary, but usually no more than two years. Therefore, it is not recommended to finance very large sums in this way, as many people have problems paying them off after two years.
Credit cards
Credit cards are another option when consumers are looking for a type of personal loan for bad credit. They are the same as securing a loan in that they are also paid off later. Cards are easy to use because they are widely accepted to pay for almost anything.
They are easy to apply for and can cost upwards of $10,000. The application is processed quickly, usually no more than two weeks. There are also those that are reviewed over the phone and approved in just minutes. It all depends on the card company. Terms vary widely, so it’s important for anyone applying to really read all the fine print.
There will be many things to consider within this seal. At the top of the list are interest rate, annual fees, overdraft fees, and more. Debt has been proven to accumulate faster using credit cards than other types of loans because they are so affordable and easy to pay off at any retailer. For someone looking for a personal loan for bad credit, this can be an unwise decision and end up hurting credit rather than repairing it.
Home Equity Line
A home equity line of credit is a smart decision. It allows homeowners to borrow against the value of their home. It is easy to estimate how much someone can get. All they have to do is take the market value of the home against what is still owed on it. Many choose not to do this if they plan to sell in the near future. However, if they plan to stay there for a long time, this is a great option.
Like other bad credit personal loans, the money can be used for whatever they want. They are often used for home improvement, debt consolidation, and more. Interest rates are low to moderate and can be repaid over up to 20 years under certain circumstances. There aren’t many downsides to a home equity loan; in some cases, the interest is tax deductible. That’s hard to beat!
The main disadvantage of this type of personal loan for bad credit is that the person taking it can sometimes end up in a worse situation regarding their mortgage. If there are two sources of income and they are well above the bills paid each month, the person can probably repay the loan with ease. Otherwise, it may not be useful. Especially for the consumer who ends up losing their job or suddenly becoming unable to work. Also, rates sometimes vary.
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