Types of Loans
If you are searching for financial assistance online, you most likely have read about bad credit loans. They are the most popular type of loans mainly because they have high approval rating, and have minimal requirements. The loan processing speed is incredible as well. So, if you need financial assistance because your financial problem cannot wait until your next payday, then you might want to consider this option. But before jumping into this borrowing opportunity, it is best to be well informed about this type of advances. After all, like any advances, bad credit loans also come with financial obligation, which can result in more financial troubles if not planned carefully. Here are things you might need to know.
Bad Credit Loans Defined
Bad credit loans are advances designed for borrowers with poor credit rating or with no credit history at all. They require no credit check, which is why the processing is fast. In fact, you can apply online and if you qualify, you get approval in as fast as minutes to 24 hours.
Although bad credit advances can offer as much as $15,000, generally online lenders only offer small amounts ranging from $100 to $2,500.
Bad Credit Loan Types and Terms
There are several types of bad credit advances to choose from. One is guarantor loan, which, as the term suggests, require a guarantor who can be a relative or friend with good credit rating and stable source of income. Another type is payday/cash advances, which have a shorter repayment term. In most cases, these loans are paid back in as little as days to a month, although some lenders allow up to several months. Then, there is the installment loans, which are paid back in an installment basis over a period of one month to a year or more.
Unless you choose a secured bad credit loan, which requires collateral to put against your loan, expect high interest rates. This is because such loan transactions are risky, given the fact that the target borrowers have a history of defaulting payments. The interest rate can go up to 25 %, but this should not be compared with the interest rate on regular bank loans. Bad credit advances and regular secured bank loans are two different things, with different features and requirements and are designed for different purposes as well.