Category: Poor Credit Loans

Banks that Lend to People with Bad Credit

The credit crisis isn’t the headline it was a couple of years ago, but the effects are still being felt by the average loan applicant. When the economy nearly collapsed in 2008, millions of people saw their credit limits cut by a big percentage, but surprisingly that’s not what crushed the average fico score.

As more and more people found themselves jobless, they’ve had a tough time keeping up with car and home payments, and that’s where you’re credit score gets decimated. If you’ve missed payments and seen your credit score end up in the tank, you’ll be looking for banks who lend to people with bad credit the next time you need to borrow money.

A List of Banks that Lend Money to People with Poor Credit

LendingTree – has plenty of options for bad credit car loans and personal loans.

Bank of America – also offers a variety of subprime car loans, credit cards, and even loans for boats and RVs.

Wells Fargo – possibly not as flexible, but still worth investigating if you need a bad credit loan.

Regardless of which bank you’re looking into, it’s important to understand what kind of loans – at what terms – are going to be available for people with low fico scores.

Here’s a short list of loans you can get from banks for people with bad credit:

  • personal loans – usually offered in amounts ranging from $500 to $1,500, these loans carry some of the highest interest rates in the world of finance.
  • car loans – you can often get the car you want, but your interest rate may approach credit card levels.
  • home loans – in spite of the subprime lending mess, first-time borrowers with a down payment still may be able to get into a home, although (as with the other types of loans) the rates will be much higher than those paid by good credit borrowers.
Almost every bank out there has loan programs for poor credit borrowers. They’re likely to make you jump through more hoops, and the terms aren’t going to be favorable, but you’ll usually end up with the loan you want. The key is to get into a habit of making payments on time so you can rebuild your credit score and start taking advantage of traditional “prime” lending options again.


Bank Loans for People with Bad Credit

You find me an adult who has never made a single blunder with their credit – not even one late payment – and I’ll show you the tooth fairy. Seriously, life is way to complicated and way too fast moving for a person never to slip up once and send in their car or mortgage payment a couple of days late. And if you’ve had a late payment, you’ve messed up your credit. Down the road when you need to borrow some money you’re going to have to start looking for bank loans for bad credit (also sometimes called bad credit personal signature loans).

It doesn’t have to be the end of the world though. Each year hundreds of thousands of people suffer a few smudges on their credit score, and each year they’re still able to borrow (collectively) millions of dollars. It’s just a question of understanding why banks will still loan money to people with bad credit or even horrible credit. From the banks’ point of view, lending is all about risk and return. Lending money to anyone – no matter how good their credit is – carries some risk that the person might not pay the money back. Banks cover that risk by charging interest.

You can think of interest as being a scale with credit score on one side and interest rate on the other. The higher a person’s credit score, the lower the interest rate the bank will need to charge them to cover their risk and insure the value of their investments over time. On the other hand, the lower the credit score the higher the risk to the bank, which means a higher interest rate. This is why people who want to borrow money from banks even though they have really bad credit will often end up paying upwards of 25% interest – even on something as small as a $1500 loan. People scream and whine that this isn’t fair, and in some cases maybe the bank is trying to take advantage of people, but the mathematical reality is that banks have to charge high interest to poor credit borrowers just to make sure they can stay profitable and stay in business, period.

So, if you have awful credit but you still need to borrow money from the bank, here are some thoughts on how to maximize your chances of getting approved:

1. Go through the loan approval process in person, face to face with the bank’s representative. I know it’s much more convenient to browse through the major lending websites looking for a quick loan, but you’ll almost never get the best deal by filling out a form online. When you meet with a loan officer in person you have the chance to be very up front about your circumstances. Talking with you face to face will make them want to work on your side to get the loan done.

2. Don’t be afraid to negotiate the terms of the loan in spite of your bad credit. You need to think of this loan as an opportunity to rebuild your credit, and if you’re going to make your payments on time those payments need to very easily fit inside your monthly budget. If they’re going to fit inside your budge the interest rate needs to be as low as possible, which is what you’ll have to tell the bank rep as you iron out the details of the loan.

When all is said and done, please make your payments on time and work to manage your money a little better so you don’t end up needing another one of these loans in the future.

How to Get a Home Loan with Bad Credit

Here’s the scenario: you’ve messed up your credit. A couple years back, after an on the job injury, you couldn’t work for six months and things piled up on you fast. Before you knew it you’d had a car repossessed, you missed three mortgage payments, and just like that your credit was basically trashed. In a stroke of luck, you were able to sell the house to avoid further missed payments, but you were stuck with the bad credit score. Now that some time has passed and you’re working steadily again, you’re ready to buy a new home.

The question is how to get a home loan with bad credit. Well, I have some good news and I have some bad news. The good news is that home loans with bad credit absolutely do exist. The bad news is that you, as a ‘credit-challenged’ borrower are going to have an entirely different application and qualification process than people with unblemished credit. You are likely to be able to buy a house again, but it’s going to take some patience and work.

As usual, you need to go through your own preparation process before ever going to talk to a mortgage broker or bank representative. Before you walk through their office door you need to already be clear on a) your credit grade (A through D), your FICO score, the LTV (loan to value ratio) of the home you’re trying to buy, and your real affordability range. As a person with credit that’s already somewhat damaged you really have no business pushing the envelope at all when it comes to your ability to stay way ahead of your payments.

Once you’re clear on the fact that you have everything in place that you possibly can in terms of your own self prequalification process, it’s time to go to the lender and see what your options are.

The biggest way you’re going to feel your bad credit score is in the fees and the interest rates you’ll be charged on your mortgage. Usually, the loan origination fees paid during the mortgage application process are called ‘points,’ and a prospective borrower can pay anywhere from one to five points as an origination fee. People with great credit very often pay zero points, while those that are trying to get a home loan with bad credit often pay up to four or five. That can get very expensive if you think about the fact that a single point on a $200,000 mortgage is $2,000.

I realize you’ll be very frustrated having to pay such steep fees thanks to your poor credit score, but there’s a certain courtesy you should extend to the loan originator working on your mortgage. It won’t do you any good to make ridiculous demands as far as lowering fees or interest rates. You have to keep in mind that anyone working on your loan will be paid completely on commission, and if you turn into a big headache they’re going to cut you loose and go work with a client that is a lot less hassle for the money. Get the best terms you can, but don’t alienate the people working to help you out.

If you’re persistent and you do your homework, you’ll able to land the home loan you want. After a few years of on-time payments you’re likely to see your credit score jump way up, and you’ll be able to investigate a refinance that will make your interest rate much more attractive.

Poor Credit Credit Cards

At a certain point a person who has damaged his or her credit has to decide when to say enough is enough. Now, I’m not saying that the person should avoid all credit completely, but I do think they should seriously evaluate the ways they’ve used credit in the past and make some observations about what circumstances ruined their credit to begin with. Only after they’ve made the effort to figure out where they’ve gone wrong in the past, as well as a commitment to improving in the future, should they start thinking about rebuilding their credit and using it again. And when they’re ready for that, poor credit credit cards are probably not a bad way to go.

In the spirit of full disclosure the first thing we should say is that credit cards for poor credit are not free…they’re not even cheap. The price of a ticket to this game usually starts off with annual fees (charged by the card provider just to keep the account open), ‘program fees’ (usually between $50 and $80, charged by the card provider. These fees basically mean “you might flake out, and we’re going to get some money to hedge our risk”), and additional card fees (only charged if you and your spouse/significant other are both trying to rebuild your credit and each want to have your own card).

If you’re okay paying all those fees, getting a credit card with poor credit is probably not a bad idea. Not only will it get your foot back in the world of consumer finance, it will also keep you from getting into trouble again.

What do I mean by that? Well, these kinds of cards are almost always secured or prepaid, and as such the issuing bank is keeping you from running up a balance you can’t pay. They’ll require you to make a deposit, which you can’t touch while your card is open, and basically let you borrow up to the amount that you deposited. Seems silly right?

It’s not. You’re going through the motions here to show the credit agencies that you’re ready to behave yourself with credit. Play the game for a couple of years and you’ll clear yourself of the bad name of “credit-challenged.”

Unsecured Loans for Bad Credit

I’ve been hanging around the world of finance and loans now for a while – everything from mortgages to car loans to credit cards. Then in the last ten years or so I see this explosion of personal loans with all their names and variations – unsecured loans for bad credit, payday loans, etc etc. Because of the jobs I’ve had I’m definitely not opposed to the different financing tools; I’m not some anti-debt zealot kook if you know what I mean (not to say that I think people should be in debt – I just recognize that the instruments of finance are fairly important to our economy).

But I just can’t seem to stomach these bad credit unsecured loans – or payday loans, or whatever they’re called. I can’t imagine a single circumstance where it’s a good idea for a person to borrow money this way, although I know what the owners of these corner payday loan stores would say:

1. Payday loans save people who are in truly tight spots, whether they’re facing unexpected car repairs, a medical emergency, a travel emergency (ie a family member out of state being injured, etc), home repairs and whatnot.

2. These guaranteed loans no credit check are not meant to be long term financing tools, and they’re not meant to be used by the same people over an over.

3. Unsecured bad credit loans simply fill a hole in the market, allowing consumers to borrow money much the same way banks borrow from each other when they run short of cash.

Each of these rationalizations should be demolished individually:

1. First of all, every one of those circumstances should be taken care of by having even a modest emergency fund on hand. If a person can operate their personal finances so close to the edge of being broke all the time – that’s still proof they manage their finances! In other words – if you can be just this side of broke all the time, you can change your habits slightly to keep an extra $500 in a savings account to take care of the emergencies mentioned above.

2. Everyone who has spent even ten minutes in the marketing world knows that your biggest source of business is almost always your repeat customers. Consumers are very habitual by nature. The single act of using one of these unsecured loans with bad credit guarantees that a certain percentage of people will use them again. You will not find a single payday loan provider who doesn’t make some effort to keep in touch with his customers so he can lend to them again in the future.

3. This is just ridiculous. Huge financial institutions do many things that individuals shouldn’t be doing. I’ll refer back to #1 and say that all you need to do in life to reduce your financial stress by an order of magnitude is scrape together and maintain a small emergency fund.

And the end of the day, it’s almost criminal that we allow people to borrow money at rates that would end up being 300% to 500% if we let people carry them out for longer terms. I’d strongly encourage all of you reading this to be a much more careful steward over your money – however little you have – so you can sleep better at night and enjoy more peace of mind.

Bad Credit Mobile Home Loans

You know, some people would say that you’re just about as low as you can get if you’re looking for bad credit mobile home loans – but they’d be wrong. My husband and I went through a period early in our marriage where we were both unemployed, and we got a couple of payments behind on our single family home. Soon we realized that we were in over our heads with that house, so we sold it (luckily real estate was still in good shape at the time).

Unfortunately, our credit was now fairly severely damaged, so renting was our only option for the time being. For the next two years we went to work on two things: saving money for a down payment on another home, and repairing our credit as best we could. We were a little discouraged, but we knew if we persevered we’d be able to get back into our own place at some time in the future.

After two years we had done a pretty good job improving our credit (both of us were around 600 Fico scores), and we’d saved about $20,000 for a down payment on a new home). Only one problem – $20,000 wasn’t going to be a big enough down payment on most homes, and 600 Fico scores still made most lenders wary of us. We soon realized that looking for a mobile home might be the answer, and we hoped to find a mobile home loan for bad credit that would let us get back into the world of home ownership.

As a sidenote, you should realize that mobile home doesn’t always mean ‘trailer.’ There really are some beautiful mobile homes out there – I should know…I live in one :) – and it’s just a question of finding the right community to put your home in.

So my husband and I started to shop for the right mobile home and the right place to put it, and we found one that was just $74,000, in a brand new mobile home community in a nice part of our town. We were thrilled.

As we began the loan application process, we got even more excited. We found out that the combination of our moderately improved credit scores along with our down payment was going to make it fairly simple to get the loan we needed. The interest rate would end up being around 10%, which is pretty high, but we didn’t mind because we knew that we were going to be buying our own place.

We also knew that the credit agencies really love to see regular payments made on a mortgage of any sort – nothing will boost your credit faster.

So for us, a mobile home was the solution to some real challenges in our financial life, and we couldn’t have bought it without a mobile home loan for bad credit.

Car Loans for Bad Credit

Car loans for bad credit are actually a lot more prevalent than you might think. After all, in the neighborhood of one in every four Americans has had some kind of problem with their credit that would put them in the class of bad credit borrowers. Your ability to buy the car you want may not necessarily be impeded by your sketchy credit past, but you should go into the loan application process  well prepared. A few tips:

1. First, and most importantly, decide beforehand how much you need to spend on your new car. Notice I said decide how much you need to spend, not how much you want to spend. Putting your wants ahead of your needs might have been a big factor in why you’re a bad credit borrower in the first place, is that fair to say?

2. Take advantage of your free annual credit report, and make sure there aren’t any unfair or inaccurate blemishes on it. Again, note that I said your free credit report – provided through the US government – as opposed to one of the free reports that costs you a monthly fee or a one time fee.

You’re already a credit-challenged applicant. You really want to go over your credit report with a fine tooth comb to make sure there’s nothing you could reasonably do to get your credit score just a little higher. Bad credit car loans exist, but you’re always better off going into the application process looking as good as you possibly can.

3. Learn about, and sign up for, your bank’s billpay program. A prospective lender will be encouraged to see that in spite of past bad behavior, you’re now in a position to make your payments on time every month without even having to remember. I personally set as many of my bills up as possible with billpay just to avoid having to keep track of them month to month. It’s extremely convenient.

If you’ll follow through with these three relatively simple steps, you’re going to find it much easier to qualify for the car loan with bad credit you need to get that new car. Now make sure you use this new loan as an opportunity to rebuild your credit and improve your standing with the credit agencies. Nearly every aspect of your financial life will be simplified by an improved credit score.

No Credit Check Unsecured Loans

Anybody who ever applied for any kind of loan would love to have the bank skip the credit check. The whole situation can be very uncomfortable, right? You have to give them all this personal information about yourself, including your social security number (and who feels safe doing that?), and then they click a few buttons on the keyboard…so they can come back and say that because you missed one car payment in 1994 they’re not going to approve you for the loan you really need. I say no thanks. I’d much rather have no credit check unsecured loans.

The great thing about an unsecured loan with no credit check is that a) they’re not going to even bother looking at your credit as part of deciding whether you’re qualified, and b) the loan is unsecured, so you don’t have to provide any form of collateral whatsoever.

Alright, we just have to be real here. If you think you can get a loan with these characteristics you’re a little loopy, and that’s putting it kindly. What you’re essentially saying to the bank is “Give me a loan based on nothing but my good looks and handshake.” You’re asking them to lend you money when you’ve clearly left some other lender with zilch in the past – that’s how your credit got messed up in the first place.

You either don’t want to provide any collateral, or you don’t have any to offer them – so it really comes down to you asking the lender to trust your best intentions and completely ignore your past transgressions. Do you think that’s a fair proposition?

Now, I’m being a little hard on you – the truth is there are loans out there that at least resemble a no credit check unsecured loan, but a better name for them is a bad credit payday loan. And it is possible to get those. I’ll tell you now that you’re not likely to get more than a few hundred dollars through these loans, and you’ll pay handsomely in the form of up front fees and steep (like Everest) interest rates.

If those are things you can handle than these loans are probably what you’re looking for.

Bad Credit Unsecured Personal Loans

Running out of money before you run out of month is a very stressful thing to have happen in your life. We’ve all sat and watched TV commercials for payday loans and thought judgmentally “that will never be me.” But…then your car breaks down the same week your kid breaks his arm at school the same week rent is due…and next thing you know you’re online looking for bad credit unsecured personal loans.

And it’s not a great feeling, but you’re just doing what you have to do for your family to get by. For those of you who don’t know, an unsecured personal loan for people with bad credit is very similar to a payday loan in a few ways:

1. It doesn’t require any collateral.

2. People with no credit or less than perfect credit can apply and have decent hopes of getting approved.

3. The loans are meant to have very short terms – usually less than one month and often just a week or so.

One semi-myth is that you can get instant unsecured personal loans. Sorry, I don’t think that’s going to happen for you. If the loan is unsecured, that means the lender is completely exposed to the risk of you disappearing without making any of your payments, let alone the full balance. Yes, they can protect themselves to a certain degree by charging you a healthy fee before your loan gets disbursed, but that only covers them so much. They’re going to want to check your credit just to see how much of  a risk they’re really taking.

I hate to say it, but people with good credit will always be at an advantage over people with wrecked credit. If you have excellent credit you might be able to get $25000 personal loans, but if your credit is terrible you won’t even get a fraction of that amount. Take some steps to improve your credit. Ironically, the steps you’ll have to go through to improve your credit will also improve your overall financial situation. I’m talking about doing things like looking for ways to make extra money, pay off old bad debts, save more, and set up your bill and loan payments on your bank’s bill pay program. If you go through those processes it will be hard for you not to see your checking account balance stay higher and your stress level stay lower.

Bad Credit Small Business Loans

I’m an entrepreneur myself, and I have a real passion for seeing small businesses succeed. You always hear the statistics that say that 90%+ of small businesses fail, but you rarely hear why. I can tell you that small businesses fail much more often due to lack of cash flow than any other reason. That’s why small business owners spend so much time looking for bad credit small business loans.

The tough part is the fact that small business loans with bad credit don’t really even exist. At least not in the sense that you’re probably thinking of them. Think about it – small business financing is really tough to come by even if you have stellar credit and a successful business running already. Banks are just very leery of giving loans to small business that are just trying to get their legs under them.

Small businesses do have other opportunities for financing though. An up and coming resource is called business cash advances. Here’s what you need in order to be a good candidate for a business cash advance:

1. Your business has to accept credit cards (not just credit cards, but that has to be one of the forms of payment you accept).

2. Your business has to have some revenue, usually at least $1,500 to $2,000 in monthly receipts.

3. You must be able to provide a history of your sales receipts, specifically credit card receipts that go back the previous three months.

4. Your business needs to already have celebrated its first birthday.

If you qualify for a small business loan with bad credit (or business cash advance) you’re going to be able to essentially borrow up to a million dollars against your future sales, depending on your current sales. In other words, they’re not going to lend you $500,000 if your business is only doing $5,000 per month in sales.

These cash advances sound great, but how much do they cost, right? I don’t want to be paying credit card interest on these programs.

Of course you don’t, and I can’t say for sure how much interest you’ll pay. I’m sure most of the finance companies who provide these services charge a percentage of the cash advance, and they probably offer some kind of discount on higher amounts.

The best part of these cash advances is they’re totally unaffected by any bad marks on your credit score. These folks run their business strictly on the basis of your gross monthly receipts, and this is the closest thing you’re going to get to small business loans for people with bad credit.

Poor Credit Auto Loans

You have bad credit, but you need transportation and your current clunker just isn’t getting the job done. You need poor credit auto loans, and you probably have several questions on your mind. Hopefully this article gives you some insight. You’re wondering ‘how much can I qualify for?’ ‘what interest rate will I pay?’ and ‘will my current debt load be a factor?’

I’m sure you can understand why there’s no clear answer to these questions. Quite a few different factors determine how much a lender will offer you. They include:

a. How bad your credit really is, because there are varying degrees of ‘poor credit.’ Have you been through a divorce? Was it an injury or illness that caused you to miss loan payments and consequently damage your credit? Did you unexpectedly lose your job? If the circumstances surrounding your drop in credit status were beyond your control, some lenders may be able to offer you auto loans for poor credit with special circumstances. After all, they’re going to treat you differently who just stopped making payments because they bought more car than they could afford, for example.

b. Your stable gross income, especially as it compares to your credit rating. If you earn a lot of money (say $75,000 per year or more), and you have bad credit, your chances are going to be better than if you have bad credit and low income. The higher your income, the less your credit matters. Lower income, the more your credit matters.

c. The total amount of your other debt, as well as your monthly payments. Most borrowers are accustomed to having lenders look at the new loan payment in addition to their existing payments, considering the total as a percentage of your income. If you total loan payments are more than 25% to 33% of your monthly income, and you already have poor credit, getting an auto loan will be tough.

Auto loans for poor credit are tricky business, but if you persist and shop several loan providers, you’ll get the loan you need to buy the car you want.

Poor Credit Home Loans

Unless you live in a cave you know that the whole home buying game has changed completely. Gone are the days where anyone with a pulse can borrow almost any amount to buy a home with no real scrutiny of their ability to repay that loan. And thank goodness. I think we’ve all seen that such loose lending practices put us all in a tough situation in America. A return to to conservative lending practices may not be as fun in the short term, but it keeps us all healthier in the long term.

But is the dream of home ownership dead for people whose credit has been damaged? Actually, no. Poor credit home loans still exist, and they always will. But if you have bad credit and you’re determined to buy a home, be prepared to run the gauntlet with the banks before you sign the closing documents and receive the keys.

I believe the home loan qualification process will take on a much more personal feel again. I can see more and more situations where prospective borrowers go to their local bank or credit union and go through a relatively extensive interview process with mutliple loan officers. After all, on paper these bad credit borrowers don’t look good. So if they’re going to get a home loan for poor credit it’s going to be because they can convince a lender that their past is not a reflection of their commitment to being healthy borrowers going forward.

Here are a few things you can do if you really want to qualify for a home loan for people with poor credit:

Show the bank you’re taking obvious and meaningful steps toward improving your credit worthiness as well protecting your ability to make your mortgage payment on time, every time. For example, have you sold off some of your debt? Have you unloaded that expensive SUV and traded it in for a smaller, more economical car? Getting rid of your expensive cars will not only improve your debt to income ratio, it will show the lender that you’re committed to making your mortgage payment a high priority. The same would be true for credit card balances. If you have consumer debt on things like furniture and electronics, sell them off as fast as you can. You want to show the bank that you can make sacrifices in order to have a home.

Be patient. Unfortuntely, going into debt and ruining your credit take very little time compared to what it takes to get out of debt and improve your credit. Are you willing to follow a path of discipline and sacrifice for the next two or three years (or even five years) so you can own the home you’ve dreamt of? I hope you can see a day in your future when poor credit home loans aren’t even a consideration for you.

No Credit Check Credit Cards

I’ve always wondered how any credit provider could afford to offer no credit check credit cards. It just didn’t seem possible, given what we all know about how credit is extended. You apply for a credit card, the credit company looks at your income and your credit history, and they decided a) whether to extend you credit, and b) how much to extend. How on earth could they give a person a credit card while completing ignoring the ‘credit score’ portion of the equation?

To answer that question I started doing a little digging, and I found some very interesting facts on no credit credit cards. The reason they’ll give you a $300 credit limit even though you have squat as far as a credit history is their fee structure. This should blow your mind.

I found a table called “Fees for Issuance or Availability of Credit”

Check this out:

Account Set-up Fee (what they’re going to charge the day they give you the card): $29.00

Program Fee (not sure what this means, but I’d guess it has something to do with ‘you have no credit’): $95.00

Monthly Servicing Fee (apparently this is an annual fee that they don’t want to call an annual fee, I suppose because they spread it out over the whole year): $84, paid at $7 per month

So let’s total this all up…and then laugh hysterically at how much they’re going to charge you for your $300 credit limit (okay it might be a little higher or lower, but I’m in the ballpark).

$29 + $95 + $84 = $208 for the first year, and $84 per year after that.

Funny right? Not really.

I guess you could look at this in terms of the ‘cost of establishing credit.’ That does make some sense, and if your long term goal is to buy your own home or even your own car, paying a couple hundred dollars in fees is probably worth it to get your credit rolling.

But make sure you check out alternatives. If you’re a young person you might consider asking your parents to add you to one of their credit accounts for a while. I’m not even saying they should let you use their credit card – just put you on their account so the credit agencies start to get some information about you as a credit holder. Of course, you’d only want to do this if your parents kept their credit squeaky clean. This whole thing would backfire if your parents were making late payments right? ;)

As always, I’ll finish by saying that you should use credit very conservatively and very wisely. Credit card debt is a miserable thing. You don’t need the stress, so stay clear of it.

Loans for People with Poor Credit

Many, many of us are dealing with a damaged or demolished credit score right now. We got in over our heads with too much car, or too much house, or too many nice clothes, or whatever it was – and now we’re staring at sub-600 FICO scores. But that doesn’t mean we have no need for borrowing money in our lives anymore. We actually might need a little borrowing power now more than ever, and that’s why we’re on the hunt for loans for people with poor credit.

There are actually all kinds of loans for poor credit, there’s a whole subset of the lending market dedicated to helping out people just like you and me who made some mistakes with borrowing money in the past. Here are just a few of your options as a damaged credit borrower:

Home Loans for Poor Credit

If you’ve hurt your credit score, but you’d still like to borrow money to buy a home, or refinance the one you have, you’ll need to find the right kind of lender. These kinds of loans are available, and they usually carry much higher interest rates than traditional home loans.

Car Loans for Poor Credit

I once knew a guy that owned a used car lot where they sold almost exclusively to people with no credit at all, or very bad credit. Many of his customers were undocumented immigrants who didn’t have a social security number, let alone a FICO score or well established credit history. He ran a nice little business helping these folks get into cars, but he did charge them 18% to 24% interest. I guess they were just doing what they had to do.

Personal Loans for Bad Credit

These are probably the most famous (or notorious) bad credit loans. Around ten years ago you started to see check cashing and payday loan stores pop up all over the place, offering people small loans of a couple hundred to a thousand dollars to help them get to their next paycheck.  These loans are very often borrowed by people who have damaged their credit to the point that normal credit cards or signature loans are not an option for them.

Keep this in mind as you investigate these different types of loans for poor credit. Just because you have bad credit now doesn’t mean you always have to. You could just as well be a credit superstar within the next few years. It’s just a question of committing yourself to managing your finances a little more carefully and reducing your need for borrowing. That’s kind of how credit works – the less you need it the more people want to give it to you.

Poor Credit Secured Loans

Once you’ve messed up your credit it’s no secret that your borrowing options become severely limited – some even thing non-existent. It’s not true, though. If you need to borrow some money and you’ve all but destroyed your credit, poor credit secured loans could be the path you need to take.

All forms of borrowing are a matter of risk and reward on the lenders’ side of things. Every single person they lend money to represents some risk (because there’s a possibility the person won’t repay the loan…or even make their payments on time), but also some reward (because if they do make their payments and repay the loan the bank will get its money back plus the interest on the debt). A bank stays in business and turns a profit by giving out loans to people that, on average, are going to repay the principle plus the interest.

And you – with your damaged credit – represent more risk than reward, so you need to tip the scales in your favor. That’s why you’re looking for secured loans for poor credit. By offering the bank some additional security, you’re reducing the risk you represent to them, and increasing their view of the potential reward.

What can of security do you have to offer? A person borrowing a poor credit secured loan will often use their car as security, or collateral. If you have a car that’s free and clear – and worth something on the open market – a bank can take the title of that car as collateral on your loan. If you disappear without completing your repayment, the bank can sell your car to recover their lost money, or at least part of it.

And how do they value your car as a piece of collateral? Usually they’ll look at the Kelly Blue Book value. So although you might feel your car is worth $2,000, if Kelly says it’s worth $1,200 then that’s exactly what the bank will say it’s worth in terms of collateral on your loan. Are you starting to see how these statistics (things like Blue Book value and credit score) can make or break your borrowing power?

Of course, cars aren’t the only collateral you can use to get a secured bad credit loan. You could use anything valuable, like jewelry or other personal posssessions. All that matters is your ability to show the bank that they have nothing to risk by lending you the money.

No Credit Auto Loans

I didn’t buy my first car until I was 21 years old, and I didn’t have enough money to pay cash. That meant going to my parents’ credit union and trying to qualify for a car loan. I did have some credit established at the time, but not enough for the credit union to feel comfortable giving me a no credit auto loan. My parents had to co-sign on the loan.

But what if you don’t have parents (or some other relative) that can co-sign on your loan? Will you be able to find a lender who offers no credit check auto loans? It won’t be easy, but if you can find the right bank, you better be ready for some ‘creative’ financing.

Most of the time these kinds of car loans are going to be offered at the dealerships themselves. You’ve probably seen signs waving outside used car lots all over the city where you live screaming ‘no credit? no problem!’ They’ll lend you the money alright, but it’s going to come at a price.

I used to have a friend whose family got into the used car business and I got to watch closely how they operated. None of the people they sold cars to would be considered traditional or A-class borrowers. These were people that no bank or credit union was going to touch. My friend and his family regularly gave people loans to buy cars and charged them upwards of 21% interest. Can you imagine paying credit card interest rates on a car loan? Well, if you need no credit check auto loans with repo that’s what you’re going to be up against.

The only advice I can really offer is to look long and hard for a person who could co-sign your loan. It will probably be the difference between paying double-digit interest and paying in the neighborhood of 7% interest.

This is a loan you’re probably going to have for three to five years, and that big of a difference in the interest rate will save you hundreds and hundreds of dollars.

Auto Refinance for Bad Credit

Let’s not kid each other. We both know why you’re looking for a bad credit auto refinance loan. I’m guessing it went a little something like this:

A couple years back you started a new job, and it paid double what your previous job was giving you on a monthly basis. Suddenly, you decided that income was bullet proof and it was time for you to start living the life you had dreamed about and so obviously deserved. You went right out and bought a $60,000 SUV and immediately put $5,000 worth of rims and tires on it, not to mention the aftermarket entertainment system. You never felt cooler pulling up to your weekly softball game with your buddies; you were finally living the dream. But oops – the dream carried a $1200 monthly payment.

Next thing you knew, things started to go a little sideways at work, and you missed a couple of those $1,200 payments. You went from being Mr. Shiny Credit to  Mr. I need an auto refinance for bad credit. Not too fun is it? You’re wishing you had gone for $5000 auto loans, instead of $55,000 auto loans huh?

So what are your lenders going to be looking for when you try to get that refi done? Well, first of all they’re going to want to look at your overall debt profile. In the months since you started missing payments what have you done to improve your situation? Have you paid off any of your consumer debt? Have you reduced your overall debt at all? Has your income stabilized?

These days your lender will probably want to see at least three or four of your most recent pay stubs, and if you’re a commission-based earner they’ll want to see even more than that (after all, any salesman can have three or four good weeks. I’ve been there).

Once you’ve shown that you actually produce enough money to keep your payments current after you go through the auto refinance with bad credit, you better prepare yourself to see a pretty gnarly interest rate. I’m sure you understand that being a bad credit borrower you’re now facing double-digit interest rates at a minimum. It’s not out of the question to pay over 20% on your car loan after the refi. Can you handle that? I guess you don’t really have a choice.

Hopefully you’ve learned this lesson in life: those that create the appearance of having the most money very often have nothing except the most debt and stress. People who choose to live life driving used cars in and living well inside their means may not look like much, but they have more fun and they sleep better at night.

Small Personal Loans

Nobody wants to be in a situation where they need personal loans, but the fact is it happens. All these Payday loan operations are in business and profitable because the market obviously exists. Most of the time people are borrowing amounts in the neighborhood of  $300 to $500, but what if you’re only looking for small personal loans?

These smaller short term loans are available; you can borrow as little as $50 or $100, and the fees will be correspondingly small, so that’s a relief. The application and qualification process will be similar to what you’d experience with larger loans: the lender will expect to see proof of income (in the form of recent paystubs or a w2), and they’ll probably run a credit check to make sure you don’t have any major blemishes on your credit history. So what if you have terrible credit?

That’s probably not too big of a deal. If there’s one thing personal loans providers are used to it’s giving people small instant unsecured personal loans for bad credit. The downside is they’re going to make sure they get their money one way or the other – and that means fees. Sure, a $15 fee on a $75 loan may not sound like a lot, but it’s 20%, and you could end up paying interest on top of that.

Before you ever go into a loan store and fill out an application, it’s probably wise to ask yourself a few questions:

Do I really need this loan? Is there any way I could cover this expense without having to borrow this money?

Am I sure I’ll be able to repay the loan? What circumstances put me in this situation? Can I reasonably hope to repay this loan and not have a similar circumstance arise in my life?

It’s crucial that you realize how you got where you are, and do everything possible to avoid being back at the payday loan store three months later applying for another small personal loan with bad credit.

Credit Cards for Poor Credit

It’s hard to get much done in modern society without credit. You can’t buy a home, you can’t buy a car (unless of course you have a bunch of cash on hand), and in many cases not having credit (or having bad credit) will stop you from getting satellite TV or even a cell phone. So, if you’re a person with a bruised FICO score and a desire to turn things around, you’ll need to check out credit cards for poor credit.

There are a few ways you can go here. The simplest way to think about getting a poor credit credit card is to just have your parents add you to one of their accounts. When I was 18 my parents put me on one of their accounts (I didn’t even know they did it) and by the time I was 21 I actually had fairly good credit and a decent credit history for prospective lenders to look at when deciding whether to let me borrow any money. Thanks to my parents’ foresight I was able to get my first car loan at the age of 22. They did have to co-sign on the loan, but a short time later I was able to get my own loans no problem

Of course, that’s kind of an odd way to think about credit cards for people with poor credit.  What people are really looking for is a credit card provider who will give them a low limit credit card they can work with for a while in order to improve their standing with the credit agencies. These are most often going to be secured cards, because  a bank isn’t going to hand over an opportunity for you to make your situation worse (you’ve already done that, right?). What they’ll do is give you a secured card with a low limit, and then you’ll have the opportunity to use it and pay it off. Eventually your card provider will give the good news to the credit agencies and your score will slowly climb.

Ironically, carrying a small balance on your card for a few months, and making regular minimum payments, will go further toward improving your score than paying it off in full every monthy would. You see, lenders want to know that you can manage debt as much as they want to know you can manage credit. Does that make sense? Paying off your balance every month proves you can manage your credit. Carrying a small balance month to month and keeping the payments current shows you can manage your debt. Since a home loan or car loan isn’t something you can just pay off at the end of the month, you can use your credit cards as a way of proving that your ready to wisely use the bigger debt instruments. Think of the interest you pay as the cost of improving your credit to the point that you’ll be able to buy a nicer can and someday afford a home.

Business Loans for Poor Credit

Starting the business is the American dream. Well, it’s my American dream. It has been since I was a young kid – probably 12. I want to run my own shop, manage my own time, and have my customers be my only boss. There’s only one problem. Starting a business takes cash – cash I don’t have. So my options are to borrow money from friends, family, or the bank. My credit is no good and my friends and family are just as broke as me – so I have to hope I can find a bank that offers business loans for poor credit.

One thing is for sure – if a bank is going to lend me any money at all given my damaged credit, I’m going to have to make a pretty compelling case that I’m not a huge credit risk, even if that’s what the statistics say about me. I think if I put the right pieces together I’ll be able to get the poor credit small business loan I’m looking for.

Number one, I need a rock-solid business plan. Before I walk in to that loan officer’s office I’m going to make very sure I have my plan and my presentation nice and polished. I’ll be able to show him that I have a product for which there is a sizable market, an intelligent and efficient plan for getting the word out about my product, and conservative but encouraging projections of cash flows during the first 12 months I’m in business. Of course I can’t elimiate all the risk the bank is taking by giving me a loan, but I’ll show them I’m willing to do whatever it takes to make my business work – I’ll give up food, sleep, and a social life in order to watch my baby grow.

Of course it won’t be easy. The vast majority of traditional banks have no interest in giving business loans with poor credit. They’re looking for people with an immaculate credit history, collateral, and even a business that’s already cash flowing before they’ll be willing to lend a single dollar.

That’s why if you’re in the same situation as me you might want to consider looking for a private lender. It won’t be easy, but if you can find a person with some decent liquidity and an entrepreneurial spirit you may find they’ll be willing to take a  calculated chance on you and lend you the money to get off the ground. At the same time, they may not see the benefit of lending you the money (since you’re considered a credit risk). If they really believe in you and your product they may only want to give you the money as an investment and take a percentage of the business in return.

However you raise the money for your business (whether it’s through a poor credit business loan or an investor), never give up on your dream. America needs more committed entrepreneurs to help our economy thrive in the long term.