Finance Options for Those with Bad Credit
Obtaining any kind of financing when you have bad credit can be extremely difficult, especially when you’re not aware of the different kinds of loans available to people with poor credit scores. If you’re just basing your outlook on the experiences you’ve had with major banks or credit unions, you might be ready to give up on your search for financing. Although building your credit should still be a top concern, it’s possible that you may be overlooking some of the loan types that are already available to you. That being said, here are a few different financing options to consider if your credit is less-than-perfect:
1. Payday Loans
If you have a job and can show proof of employment and consistent income over the past two months, chances are you can easily get a payday loan. The downside is that this kind of financing will usually come with higher interest rates than other loan agreements. However, high approval rates make this type of financing a useful option for people with bad credit. If you want to find out more about payday loan options, Cash Lady have published a useful guide worth checking out.
2. Peer to Peer Lending
Peer to peer lending networks allow you to connect with investors who may provide loans to low credit applicants who have a convincing pitch to justify the financing. Angel investors, opportunistic lenders, and even philanthropists use P2P lending networks to find unique and fulfilling investing opportunities that let them interact directly with the parties they’re lending money to. Thus, such loan options are typically best when you have a solid business plan in mind.
3. Bad Credit Loans
Some lenders offer high-interest loans that are specifically designed for people with bad credit. However, these should be viewed as last resorts because they usually come with the most costly and stringent rates and terms, as the lender is assuming a great deal of risk by loaning money to high-risk borrowers. It’s also worth noting that there’s almost always a limit to how low your credit can be in order to get accepted for a “bad credit” loan, so it may be more accurate to call these “somewhat bad credit” loans instead.
4. Secured Loans
Finally, if none of the options above seem suitable, you may want to consider using an asset as collateral to arrange a loan that is backed by the value of that asset. For example, if you own a vehicle of decent value, you could use the title as leverage to obtain a secured loan. Of course, then there’s the risk that you could lose the asset you used as collateral if you default on the loan.
One of the Above Should Work
If your credit is so horrible that peer to peer lenders won’t deal with you and bad credit financing companies won’t either, and you don’t have any valuable assets that you’re willing to use as collateral, you can always count on being able to get a payday loan, as long as you’re gainfully employed. If not, then your focus should shift towards obtaining a reliable source of income before you commit to any ongoing repayment obligations.