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Bad Credit Loans Information for New Applicants [Bad Credit]

A bad credit loan a perfect financial remedy for borrowers who have credit issues like bankruptcy. This type of loan is mainly meant for borrowers who have a bad credit rating. It is also usually given at higher interest rates simply because of the high risk of defaulting associated with lending out unsecured loans to people with shaky financial pasts.

Unlike traditional loans, bad credit loans often take a shorter time to be processed. However, the approval rate for the loans is usually low through traditional lenders. If you have poor credit you want to apply with a company that specializes in bad credit financing. A lending firm will consider various facts to determine whether you actually need and can repay the money you are borrowing. Some lenders may ask for documents like your pay slips before they can accept or reject your application.

Who needs a bad credit loan?
Bad credit financing is tailored to help individuals who have credit problems and are in need of money urgently. People with credit problems include those who have poor credit ratings, have no collaterals to provide as security for loans or are considered bankrupt. When applying for this financial aid, you do not necessarily have to provide any form of collateral or your credit score report. Right from the start, the lenders understand that by opting for this type of loan, you definitely have a poor credit score.

Features of a Bad Credit Loan

  • Loan processing takes less than 48 hours
  • Comes with high interest rates
  • Requires very few documents to be approved
  • Tailored to help poor credit rated borrowers
  • No credit history check is done

Benefits of Bad Credit Loans

  1. The loans have annual percentage rates (APR) that can be adjusted. However, this can only be done by professional lending organizations rather than the ordinary financial institutions. Usually, the APR can be adjusted to as low as 7.99%.
  2. The amount of loan given can be easily increased from the normal $1500 to around $25,000. However, this is mainly done by established lending firms that have the authority and ability to manage such risks. With the adjustment, the loan can either be charged with an adjustable rate or fixed amounts based on your monthly income.
  3. The financing can be paid early or in the stated time. There are actually no penalties for making early payments. In addition, a borrower is usually offered a grace period to organize himself before starting to repay the loan.

Disadvantages of Bad Credit Loans
The interest rates of these loans are higher. Lending out unsecured loans for people with bad credit is a risky business and this is why lender put high rates. The high rates are meant to cover the risk of the borrower failing to honor the agreement. The interest rates charged can be either fixed or adjustable.
The terms and conditions of bad credit loans are usually rigid compared to those of traditional loans. On borrowing such a loan, you must repay the amount within the stated period of time. Changing the terms and conditions is usually not allowed after your application has been approved.

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