Guaranteed Loans for Bad Credit with No Fees

You don’t want to pay fees. Fine. There are online lenders who will accommodate you, but you have to know they’re going to get their money somehow. So if you don’t want fees you should be prepared for other aspects of the loan to be even worse.

Do the math:

If a lender says they’ll give you guaranteed signature loans with bad credit and no fees, how much can they earn on a $1,000 loan?

Loan Amount: $1,000
Fees: $0
Loan Term: 21 days
Interest Rate: ?

Why the question mark next to interest rate? Because even though they may quote you 10% of the total loan, if you factor in the term (21 days), you’re actually going to be paying triple digit annualized interest.

“No I’m not!” you say defiantly. “It’s not like I’m going to hold this loan for a full year.”

I’d hope not, but the statistics are not in your favor. The majority of people who borrow guaranteed personal loans for bad credit do NOT pay them back within the original term. C’mon…think about it. You’re borrowing $1,000 with the expectation of paying it back in three weeks (and sometimes less). That means you’ll need an extra $333 per week just to pay back the principle. But there’s no way you’ll have less than $150 interest due on that loan, so the reality is you need more than an extra $400 per week just to pay back this loan on time. Do you even make $400 per week?

Sure, you might be taking out unsecured signature loans just to cover you till payday, and your next paycheck might pay off the principle, but what if it doesn’t? Or what if you have to repair your car, water heater, or buy a new washing machine with the loan? Then you can’t zero it out with your next paycheck.

People wonder why personal lenders charge such crazy fees and interest rates. I’ll tell you why. It’s because a high percentage of their borrowers don’t repay their loans. So they use high fees and interest to recoup as much cash as possible before your typical payday loan borrower defaults.

So rather than looking for guaranteed loans no credit check, let me encourage you to evaluate what got you into this position in the first place. Examine your income, your personal budget, your spending patterns, and try to put yourself on the path to never needing this kind of horrifying financing again.

Do You Really Need A $25,000 Personal Loan?

According to Lending Tree, a personal loan can be used for anything from debt consolidation, a wedding, a vacation, or other personal uses. There is technically no restriction on what  exactly a personal loan can be used for, but sometimes people opt for a home equity loan, or an auto loan, for certain other expenses.

There are some risks to personal loans, however. While it’s great to think about being able to buy virtually anything with a $25,000 personal loan – from a boat to a vacation to dirtbikes – its important to know that they often carry much higher interest rates than other loans. We calculated a 60-month, $25,000 personal loan in New York at over 10%. As of April 2011, a 30k Home Equity Loan at Bankrate was a little over 7%; auto loans are typically 2-5% depending on your credit and the make/model of the car. The reason for this is that personal loans are not secured by assets like a home, automobile, or other collateral. In order to cover the risk they take by lending money, the bank needs to charge a higher interest rate.

Other Alternatives To A $25,000 Loan

Consider a credit card and home equity line! According to the Federal Reserve, you CAN use a home equity line of credit for expenses such as education, medical bills, and other things. Most people use their home equity line for home remodeling and repairs, too.

Credit cards can be a good way to avoid a high interest rate on a 25000 personal loan, too. Depending on your credit score range, your credit cards may have a lower APR than what you would be approved for on the personal loan. But if you have a low Fico score, you may want to check out your options with Lending Tree bad credit. They’re not just a perfect credit mortgage provider.

Always stop and think before you go applying for a loan of any kind – chances are there are other creative solutions that you can take so that you can avoid a higher interest rate and another monthly payment to make.