Getting a loan when you have a bad credit can be a little tough sometimes because most lenders don’t want to take the risk of not being paid back. But, it is completely possible to get loans even with a bad credit. You just have to make smart financial decisions from now on.
First, know the common types of loans for people with a poor credit history. If you don’t have a car, a home equity and other properties you can use collateral then a secured loan is not for you. But, you may have to pay a higher interest rate for an unsecured loan because unlike secured loans they have no collateral to go after.
If you only need a small amount of loan to cover for unexpected expenses like car repair and health emergencies and small purchases; personal loan, which is an unsecured loan, will do.
Here are some important tips when taking out loans for people with bad credit:
- Read the terms of the loan. Check the interest rate, payment terms and late fees
- Don’t use it for debt consolidation if you have other options.
Australian Lending Centre offers debt consolidation loans that could work for you. However, if you still want to take personal loans to settle credit card debts, don’t rack it up once you paid up your outstanding balance. Doing so would set up a cycle of debt consolidation and starting all over again. Next time it happens, you may not be approved for a loan because you’re nearing bankruptcy.
- Compare loan products and try to get the best deals available. If you have a less-than-stellar credit you may have to bear with high interest rates, origination fees, and so on. It’s because extending loan to people with bad credit is riskier for lenders than lending to people with good credit.
- Order your credit report, dispute erroneous entries and use it as basis of your financial management plan. It’s hard to imagine where debt issues started especially if you have lots of them. So, make sure you request for a credit report to trace your creditors, and the charges you have been paying for. It can also give you an idea of how and where you spend your money.
Second, determine whether or not you can still rebuild your credit. Ask yourself the following questions:
- Can I establish a consistent repayment history after taking out this loan? If you think you have sufficient income to repay your loan and stick to your spending limit, then you can easily rebuild your credit.
- Am I willing to let go of my high-interest credit cards and choose one with the lowest fees and rates? The fact that you turn to personal loans, debt consolidation or any other loan options for people bad credit could mean that your credit card is not meeting your financial needs.
You can shop around for credit cards with lowest fees and rates, and take into consideration the annual fee and an interest rate.
Third, choose your lender wisely.
Beware of lenders charging interest rates as much as 500% for alternative loans. Think twice before taking loans for people with bad credit and consider the urgency of your financial situation and the availability of better loan options.
If you need any help in finding the most suitable loans for people with bad credit, call Australian Lending Centre today!