Anyone looking for a loan in today’s financial market is in for a tough road ahead. As the economy seems to be more and more uncertain each day, the general feeling is that only those with the best credit scores can even qualify for a personal loan these days. While it is true that bad credit will cause a barrier, personal loans are still available for you. The trick is to find out where to go, who to talk to, and what to look for.
In this article I will go over some key facts about the personal loan market today and explain how even with bad credit, personal loans are attainable at a reasonable rate and can even help your financial viability in the future.
Whole New Ball Game
Anything that you think you know about the lending industry is likely not going to be helpful when discussing personal loans for people with bad credit. The rules of these loans, also called cash advance loans, are contrary to many of the popular lending practices that you know. Because of this different approach, getting a personal loan with bad credit is a whole new ball game.
While most personal loans are given over a long period of time and rely heavily upon credit ratings to determine the principle amount as well as the interest rates offered, cash advance loans at will not require an inquiry into your credit. Instead these loans are based upon income alone. Therefore, all you need to have is proof of your identity and a current paystub from a secure job that you have held for at least six months.
The New Statistics
Due to the unique nature of these personal loans, many of the standard conventions that you are accustomed to in the lending world are a bit different. The terms of cash advance loans are very short – generally 2-4 weeks – which is why your income becomes important. The basic idea behind cash advance loans is giving people a means to pay bills between paychecks. They then use the money from the next payday to repay the loan along with its interest.
Accordingly, since the terms of these loans are so short, the interest rate is much different than those advertised by traditional lending institutions. The interest rates on cash advance loans will be higher than typical personal loans since you repay them so quickly – otherwise the lender makes no money!
Finding a Good Lender
With bad credit, personal loans are generally seen as an impossibility. However, I hope that I have shown you why, as long as you have stable employment, loan money is available to you. Through cash advance loans, you are able to get small sums of money to help you meet your expenses, without the worry of a credit check.
However, it is also important that in doing so you find a good lender who can offer you a reasonable interest rate. That is why it is important to shop around and compare the offers of many lenders to find the best one.
Finally, in addition to the relief that income-based loans can provide, there are also their long-term benefits. If you responsibly repay cash advance loans, over time you will see your bad credit improve and lift that veil of impossibility off of other personal loan options for the future.