If you think you’re out of luck, just because your credit is less than perfect, I have good news for you. It is not impossible to get a loan with reasonable terms, as long as you know how to apply the right way.
Here are some tips on how you can get a small loan with bad credit
First, how bad is your credit?
Have you defaulted on credit card payments, bank loans and utility bills? What about your debts from subprime lenders? It is true that alternative lending agencies are not too picky when it comes to approving loans. But, anyone who makes a living out of lending people in a bad credit situation would have second thoughts on lending money to someone who can’t pay back a subprime loan.
What are the reasons for your financial woes?
Lenders would consider your application if your inability to pay your financial obligations have a justifiable cause, such as illness, divorce, sudden job loss or a failing business. All you need to prove is that you were able to get out of your financial mess and you have a better opportunity to repay your obligations on time.
You have a better chance of overcoming bad credit if it is tied to a specific event
A person with a bad credit tied to a specific financial situation has a better chance of getting a loan than someone who has a chronic debt issue. But, you still have to pay a higher interest rate because lenders are taking a risk of lending to someone with a poor credit history. But, you can always find ways to reduce the cost of the loan. You can get a co-signer; use your unattached asset as collateral or look for other ways that will mitigate the risk for your lender.
How bad do you need the loan?
Private lenders allow you to take out bad credit loans in such a short period. They will charge interest which can be a bit higher than normal. So, before you make a decision to apply for a bad credit loan, make sure that you have exhausted all other borrowing options that would have charged lower interest in the same amount. In most cases, bad credit loan should be used during emergencies, or when you have instant expenses to take care of. Otherwise, you may find yourself wallowing in a debt pile because interest rates may escalate from time to time and your income may not be able to keep up with the roll over, in case of default.
Get a copy of your credit report, before filing your loan application.
If you need a bad credit loan ASAP, you don’t have to do this. But, if you can spare a few more days, request a copy of your credit file and check if your credit report has a few errors that can be fixed.
Each lending company has its own definition of bad credit-one lender may approve your application, another may turn it down. So, why don’t you shop around for a lender that would be more lenient than the rest? Just make sure that the interest rate is still close to the rate traditional lenders offer. Don’t go for loan sharks just because you need the money at the soonest time possible.
Take time to study the differences when it comes to the cost of the loan. Who knows? You might be able to save a few hundred or even thousands of dollars just by shopping around. Just make sure that your inquiries will not be forwarded to the credit bureaus. It will not look good on your credit report. Sending multiple loan applications can give your future lenders an idea that you are in desperate need of money.
Talk to the in-house loan experts of Australian Lending Centre today to get more answers to your question, “How can I get a small loan with bad credit?