If you’re one of the millions of Americans with a bad credit history, don’t worry – you’re not out of luck when it comes to getting a loan.
There are several ways to get a loan, even if you have a low credit score.
One option is to apply for a credit card that offers personal loans for people with bad credit.
Before you apply for any type of loan, be sure to read the terms and conditions carefully so you know what you’re getting into.
If your application is denied, don’t give up – there are still plenty of options available to you.
Getting a bank loan was easy enough not so long ago, and almost anyone could do it. Small loans for purchasing household appliances were especially popular, which were processed by bank representatives in a few minutes. All this led to the fact that many people had credit obligations to banks, and not everyone was able to fulfill them.
Today, getting a loan is not easy, and it is almost impossible for people with a bad credit history. But credit card offers the best personal loans for people with bad credit history. Before getting a loan, banks check information about the client carefully. You can get a loan denial for one of many reasons: lack of official salary, an existing loan, the presence of a person on the black list, bad credit history, and so on. What should a borrower do if he or she urgently needs money and the banks refuse to deal with him or her? There are several ways of solving this problem.
- 1 Mortgage brokers
- 2 Microfinance institutions
- 3 Private investors
- 3.1 Advantages: flexible lending terms, because private investors often make exceptions for their clients; fast and easy getting of a loan; loans are available for almost anyone who contacts them; collateralized property can be borrowed for almost any amount.
- 3.2 Disadvantages: the interest rate is higher than in banks; risk of contacting fraudsters.
- 4 Risks when getting a loan in a non-banking institution
Mortgage brokers are people who help you to get a bank loan. Brokers are divided into two basic types: “white” and “black. “White” brokers work only with people who, in most cases, will be given a loan by the banks. They help you find a loan with the best terms and conditions for your particular case. Their services do not cost much, and they work within legal boundaries.
“Black” brokers work with any client, including those who have outstanding debts. They are often willing to use any tricks to help a client get a loan. It is worth understanding that such brokers work illegally, so their help may not have the most pleasant consequences. However, the “black” brokers are one of the ways to get a loan if banks refuse to lend.
Advantages: saving time and energy since an intermediary undertakes all responsibilities for negotiations and executing necessary documents.
Disadvantages: the high cost of services, working illegally, the risk of contacting fraudsters.
Recently, organizations that give loans have appeared almost everywhere. Their peculiarity is that they give small amounts of money for a short period. If a person needs a small loan, which he or she plans to pay back shortly, this is a good enough alternative to a bank. Due to the high competition, it is possible to find microfinance institutions that give automatic interest credits. However, the penalty for each day of overdue payments can reach 2-5% of the total loan amount. Therefore, when getting a loan from such an organization, you should clearly understand that the debt will be paid on time.
Advantages: Quick and easy getting of a loan; work with most people, even those who don’t have the best credit history; low-interest rate on payments.
Disadvantages: huge penalties; they give mostly small amounts for a short period.
Because of the difficulty of getting bank loans, more and more people are contacting private investors. They lend money at a certain interest rate. Since ancient times, they have been around, but only relatively recently have they started working legally, providing private lending services to citizens. The main difference between banks and private investors is that they lend to almost everyone who contacts them.
Private investors offer loan terms that are unique to each person. Interest rate and repayment terms depend on the client’s ability to pay, availability of collateralized properties, the purpose of the loan, salary levels, and other factors. Attention is drawn even to the borrower’s behavior at a personal meeting.
If a small loan is given, then in most cases, a private investor simply asks to write a receipt with all the necessary information. If the borrower violates the loan terms, he can take it to court because it has a legal effect even without notarization. If it is a large loan, private investors may require collateralized properties, the value of which significantly exceeds the loan amount. An agreement is drawn up between the lender and the borrower. If the borrower fails to fulfill his loan obligations, his property will be confiscated in favor of the lender.
Advantages: flexible lending terms, because private investors often make exceptions for their clients; fast and easy getting of a loan; loans are available for almost anyone who contacts them; collateralized property can be borrowed for almost any amount.
Disadvantages: the interest rate is higher than in banks; risk of contacting fraudsters.
Risks when getting a loan in a non-banking institution
The risk of being defrauded is only if you do everything carelessly and rashly. It is never a good idea to pay money in advance or give a receipt before getting a loan. It is better to ask for help from proven private investors and financial institutions, whose reliability there is no doubt.
When choosing how to get a loan, you should consider many factors. For example, if you need a quick, small loan for a short period, then microfinance institutions are ideal. If it is a large amount, it is better to contact reliable private investors or “white” credit brokers. It is quite possible to get a loan on good terms outside of banking institutions by doing everything thoughtfully and carefully.