If you need financial assistance and keyed in “loans” in search engines, you most likely have come across websites talking about “bad credit loans”, “unsecured loans online”, “cash advances” or maybe “payday advances”. If you read further, you will realize that these loans are similar, if not totally the same. Here, you will find answers to some questions you may have in mind on these terms.
What are bad credit loans?
Bad credit loans are advances designed for those with unpleasant credit rating or no credit history at all. They can be secured or unsecured, depending on your lender. Most banks usually offer secured bad credit loans, which require a valuable asset as collateral. Today though, banks are not the only institutions that offer bad credit advances as there are plenty of online lenders that offer unsecured bad credit loans. These advances can be the perfect choice if you do not have any collateral to show.
In other words, bad credit advances are available via traditional lending institutions and online lenders.
How much can I borrow?
Generally, you cannot borrow much unless you have an established good credit history with your lender. Online lenders only offer $100 to $2500, although some lenders may offer more depending on your credit history with them and your income. This means that if your need is more than that, you might have to consider other options. This is most especially true if your main purpose for the loan is making major purchases such as house, car and other valuable assets.
There seems to be many types of bad credit loans. Which one should I choose?
It depends on several factors, including the size of your financial needs, the requirements you can present, the payment term you prefer. If you have a collateral to show and want a lower interest rate, then the best option would be secured bad credit loans. This type of advance is locked against your collateral, which can be a valuable asset such as home and car.
However, if you have nothing to present as collateral, you can go for unsecured bad credit loans. They are also available via online lenders and offer from $100 to $2500 or even more.
In addition, there are several types of bad credit advances to choose from when it comes to payment terms. These include installment loans, and payday/cash advances. Installment loans are paid back in an installment basis over a certain period of time, which makes it the perfect option if you want smaller monthly payments. Payday/cash advances are also the perfect option if you need smaller amount of money which you can pay back on your next payday.
What are the disadvantages of bad credit loans?
Any type of loan is designed for certain purposes. Bad credit loans, for instance, are only the best choice if you have nowhere to go when you have a financial problem that cannot wait until your next payday. This is because bad credit loans, most especially if it is unsecured, charges higher interest rates.