Before you begin to learn how to get loans for bad credit, let us first know what it means and who needs them.
What are Loans for Bad Credit?
There are times when you have to meet extra expenses that make your financial budget for the month go out for a toss. While your salary is spent on the fixed everyday expenditures of the month, these expenses which might include medical emergencies or vehicle accident expenses would need you to arrange for extra cash. Now it is easy to get a loan for meeting these expenses if you have a clean credit history, but what about those that have a bad credit score or no credit score?
Personal loans for bad credit are unsecured loans that are essentially taken by those that have a bad credit history, making it virtually impossible for them to get traditional loans. The personal loans do not require you to furnish any collateral but are given against your paycheck.
Bad credit loans are generally required by those that have to meet short term financial requirements. However as they might have faltered on payments in the past hurting their credit score, getting traditional loans becomes difficult. Personal or payday loans are one of the alternatives that they can resort to in order to meet these expenses.
How can you get personal loans for bad credit?
While all traditional modes of getting loans are out of reach for people with bad credit score, there are companies that come to the rescue. They offer these loans without any collateral security such as a car or home. Offering loans to the high risk borrowers, these companies help them meet their short term financial emergencies despite a bad credit history. To secure the personal loan, you will have to furnish the following information to the lender:
Proof of Age: No company, online or loan shop offers personal loans to those that are below the age of 18 years. Therefore, to secure the loan, you will have to furnish the proof of your age.
Minimum monthly income: Different companies have different amounts that the borrower should be earning in a month to be eligible for the loan. However, $1,000 is the standard income figure that most companies seek as your minimum income.
Job permanency: If you wish to get a bad credit loan, you should be employed and having a permanent job as the loan is available against your paycheck. As the loan is offered to high risk borrowers that have a bad credit history, companies require you to have a permanent job.
Have a bank account: To get the loan you should have a bank account as the loan is not offered to those that take cash salaries from their employers. This is an important requisite as the lender simply debits the amount from your account on the final day of loan repayment.
Now that you know the requirements of getting payday loans, securing one, if required should not be a difficult task. However, if you wish to compare the payday loans with other types of loans and the benefits of the former, read on.
Alternatives to personal loans with bad credit
There might be several alternatives to getting personal loans. However, each of these alternatives has their limitations making the payday loans a better and more viable option to meet the short term financial goals. Some of these alternatives are as follows:
Personal installment loan
You can secure this type of loan from a credit union, financial institution, private lender or bank after fulfilling the required details that these institutions require. These loans have the following features:
- – Installment payment option
- – Limits on renewals
- – No collateral required
- – Once applicable late/penalty fee
- – No credit check cannot be guaranteed
You can meet your short term financial emergencies by seeking a pay advance from your employer. As this is not a loan, it might not have any interest and you can easily meet your expenses. However, abusing the practice and often taking advances can bring you in the bad books of your employer.
Credit card cash advance
You can also secure cash through your credit card. Instead of buying any good or products, you can ask your credit card issuer to provide you cash. The interest rate on taking a cash advance on your credit card might be higher than that on your credit purchases.
Friends and family
Another way to secure a loan is by asking your family or friends. While this is an alternative that can strain relationships if you do not repay on time, it is usually a good way to secure the cash if you need it for an emergency and you are sure that you will repay it in some time.
Meeting short term financial crunch is no easy task but at least getting a payday loan is. There are minimal requirements if you wish to secure a payday loan as compared to other credit types. Here are some of these benefits:
Quick to get: Getting payday loans is probably the fastest mode of getting cash to meet your financial emergency. There aren’t many tedious and lengthy forms to be filled. You simply need to furnish all the details mentioned above in the application form and the direct lender will contact you on receiving the application and verifying the details. Once verified, the lender would immediately provide you the required or approved sum of money.
Easy qualification: Qualifying for a payday loan is much easier and faster when compared to other credit modes. You do not need to provide collateral except the details of your employment and your bank account. You can get a personal loan despite having a bad credit score, which is otherwise detrimental to securing any traditional loan. No credit check loans are not available now.
Flexibility of payment: Online bad credit loans are more flexible by way of securing the cash and repaying the loan. While you can use the cash as you want to, payment is also easy as it is simply debited from your bank account at the repayment date.
Now that you understand what bad credit payday loans are and how they can be secured, getting one should be easy. However, you should not make this a habit and use the loan amount to meet financial emergencies only.