Low credit or more popularly referred to as bad credit is often the most undesirable state to be in when you are faced with an emergency and are looking for loans. Had it been some 20 years back, getting a loan was almost impossible with a bad credit score. However, in the current time there are a lot of lenders who have come up to cover the gap which was created with none of the banks operating in the space. However, this leads to another question- How to select the ones which are reputed and best suited to our requirements and the financial situation.
Working out the terms of the loan
It goes without saying that if you have bad credit, taking a loan which calls for the lower monthly installment will be the best situation to be in. However, at times one has to compromise with the loan terms offered by the lenders. Loans with bad credit are generally the high risk loans where the pressure on the borrowers is of paying a higher amount in the form of interests while the lenders are skeptical about the fact whether the borrowers will be able to pay the amount or not.
So with the bad credit short term loans like the payday loans it always, makes a lot of sense to accept their terms and conditions only when you can make the repayment on time and understand the merits and demerits of the loan.
- Immediate access to money
One of the biggest factors associated with these loans is the approval rates on them. There are hardly any lenders who deny the loan request for the payday loans. With no collateral and a bad credit getting a sure shot approval always attracts customers towards this loan. However, all is not that great. There are considerations which need to be taken.
The amount of money one can get under these loans is extremely low and can extend for up to $2000. These loans can be granted within hours of submitting the application and are best suited in case of emergencies where one needs small amounts of money from www.thenetlend.co.uk.
However, the real game begins when it comes to the repayment of these loans. Based on the paycheck, these loans carry an interest rate as high as 30% for the period of 14-30days. For an amount of $1500 an individual will need to pay a sum of $1950 with the interest and the fees. This means that they will be left with little money to deal with their monthly expenses. This in the grip of payday loans is often seen taking multiple of these loans.
- Person 2 Person (P2P) Loans
There are loan sites which connect the borrowers to the lenders directly. Borrowers put their loan taking criteria which if the lenders agree; the two parties contact each other and go ahead with the loan proceedings. These loans are extremely high risk for the lenders as there is less chance of them getting any respite if the borrowers default.
- Cosigner Loans
A third option is a cosigner loan, which is arguably the most affordable option when seeking a personal loan with bad credit. The interest rate is kept low by a cosigner, who guarantees the monthly repayments will be made without fail. This means the degree of risk a lender faces is effectively removed, and because of this a low interest rate is charged.
In case of the bad credit loans with a co-signer, the risk of the lenders is reduced to the minimum. The lenders usually agree for a lower interest rate and this means a lower monthly repayment for the borrowers much to their satisfaction. In case of defaults, lenders have all the right to put the cosigners into a tight spot by forcing them into the repayment of the loans which the actual borrowers failed to do.