Posts tagged: personal loan poor credit

Personal Loans for Poor Credit


There are millions of people today who have poor credit and more fall into this group every day. Most of you know someone who is has lower score and you may be one of those millions with the poor credit. A personal loan can be a lifesaver for many people with poor credit. There are situations that arise unexpectedly, like a car repair or medical bill. Creditors and lenders are showing that they are still willing to provide personal loans to consumers with poor credit.

Getting a personal loan for poor credit from a bank or lender is harder now than ever. There are many financial establishments today that do approve personal loans for consumers with poor credit. Just because your credit is considered poor that does not automatically stop you from some type of personal loan.

For anyone who is looking for a loan, it is important to understand exactly what a personal loan is. Much different than a car or home loan, a personal loan is unsecured, which means there is no collateral provided to secure the loan. This does make providing this loan a little risky for the bank or lender. These loans can be big or small; you might find $25000 personal loans or as little as $1000.

To qualify for a poor credit personal loan, an application will have to be filled out first. The typical information needed is your full name, income, Social Security number, and other necessary information. The one providing the loan will decide your credit worthiness, even when looking at a poor credit history. With a personal loan, a credit check may also be necessary. The amount that is borrowed may be limited to $1,500.

The loan provider may help you in making an application look more pleasing by recommending that you borrow a smaller amount or extending the length of the loan period. This way, the monthly payments may be lowered and even increase the chances of you being approved for the loan.

It will also be decided whether or not you have a steady income. You are more than likely to be approved for the loan if you have been at the same job for many years. However, if you have been changing jobs quite often, it may be less likely to be approved.

The application process of a personal loan is typically quickly and does not require a formal closing. The process includes a written application, payment schedule and promissory note.


Poor Credit Personal Loans


With poor credit personal loans your challenge is not going to be qualifying for them; getting the money deposited into your account is going to be relatively easy because the application process is ridiculously simple. No, your challenge won’t be getting the money. It will be paying it back. So let’s talk about how that’s going to happen.

Let’s say you borrow a personal loan with poor credit, and the term is 14 days. You borrow $300. There are a couple of serious issues to address here. The first big one is that the lender is probably charging you between $15 and $25 per hundred dollars you borrow (it starts to add up fast if we’re talking about something as big as $25000 personal loans, which means you start out with loan (effectively) of say $345, being somewhat conservative. You just borrowed $345, and the money is due two weeks from today.

A couple questions:

1. How many paychecks will you be receiving between now and two weeks from now?

2. What percentage of one of your normal paychecks is $345? If you normally earn $500 per week, $345 represents about 35% of your gross pay (before taxes) for the next two weeks. Keep that in mind.

3. Of the next two paychecks you receive, will $345 of what’s left over after taxes be available to pay off this debt? What bills are due over the course of the next two weeks?

4. Finally, and most crucial of all, will you actually be able to have the balance paid in full by the due date? If not, do you realize you’ll be paying extension and renewal fees? I read a statistic on a consumer defense website that said personal loan borrowers with poor credit can average around 10 renewals per loan. Ten!? By the time you pay all the renewal fees on that personal loan you will probably have paid back more than double what you borrowed, and all within a few months. This is why you hear that the ‘real’ interest rate on these loans is often over 500%.

So I would ask you to read through the set of questions I asked above. If those questions make you realize that instant unsecured personal loans can going to hurt you much more than they will help, find another way to make it through your week till your next paycheck! You’ll save yourself tons of money, stress, and lost sleep.