Bad Credit Loan – If your low credit score limits your borrowing options and you have an urgent need of cash, you can apply for it.
Although they may have sky-high interest rates and are difficult to repay, this type of loan can be the only way to overcome your financial issues if you do not have a co-signer or an asset to offer as collateral.
But, you have to be prepared to face with high interest rates or to not being approved at all, since you are considered to be a risky consumer due to your low credit score.
If your credit score is 650 or less, you are a prime candidate for a bad credit loan.
How To Get A Loan With Bad Credit?
If you have time, it is recommended to improve your score. So, to get affordable interest rates. You can improve your credit score by making on-time payments, low credit utilization and no new personal loan or other type of loan applications.
But, if you need cash quickly and it is not possible to accept you, due to your low score, you can ask a bank or credit union loan officer for an interview to get a bad credit loan.
It can be helpful to bring some documents that prove your credit worthiness. For that interview such as
- your tax returns
- details of your job history
- your salary
- List of assets such as home, car, property, etc.
- List of unsecured debts, whether you pay or receive alimony or child support and your bank statements.
Car Loans With Low Credit Score
If you have a cleaner history, you may have a higher chance to receive the loan you need. So you can start with fixing your damaged credit history by paying off your monthly payments. There are two main terms lenders consider while deciding if you are suitable to get a bad credit car loan:
- The strength of the borrower (If you will be able or willing to pay off the loan)
- Loan exposure (sale price of the car + other financed expenses – down payment cash – trade-in value = loan amount)
So, you should increase the value of your trade-in. And the amount of your down payment to minimize the loan amount.