As you can understand from the name itself that bad credit loans are for people who have a poor credit score and those who are unable to obtain personal loans or other forms of loans due to their credit score. Credit score is a factor that lenders always consider before lending money to an individual. Furthermore, a high credit score indicates that the borrower is less likely to default, reducing the lender’s risk. People with a low credit score, on the other hand, are more likely to default, and the rate of interest on bad credit loans is, of course, much higher.
Fast Cash Loans is the best alternative option, which can help someone saving an emergency situation for which no other options of getting money were available. There are different types of bad credit loans and depending upon your requirement you can choose which loan option will be the most profitable for you, but always keep in mind that bad credit loans are lot more expensive than personal loans. Some of the commonly available bad credit loans are –
- Credit card advance
- Payday loans
- Home equity loans
- Loans available against insurance policies
Credit card advance
Not many people are aware of the fact that credits card can also be used at the ATMs for cash withdrawal just like a debit card. The limit of maximum cash available depends upon the credit card company and on major advantage of using credit card advance is that it doesn’t have any separate impact on your credit score. Though it is instantly available, borrowers are required to keep in mind that the rate of interest on this is pretty high and there is also no interest free period. That means interest will be charge from the moment you have withdrawn the money.
Payday loans
These are easy to get, short term small amount loans with typically high rate of interest. Instant loan are provided for a period of less than a month and along with a high rate of interest borrowers are also required to pay a borrowing fee and that make these loans really expensive. Inspire of being expensive, as it can be availed well within 24 hours, they can serve effectively during an emergency when urgent money is required and no other source is available.
Home equity loans
Just as home loans, home equity loans are secure loans where you offer your house as collateral. Since you are providing them with collateral, lenders don’t often bother about the credit core of the borrower and among the different types of bad credit loans that we are discussing here home equity loans have the lowest rate of interest. But no tax benefit is involved in home equity loans and if you default – there is a high risk of losing your home.
Loan against insurance policies
You need to present your insurance policies as collateral for getting this type of loan and as lenders are assured of getting their money back through your insurance policy they really don’t care for your credit score.
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