If you have bad credit and are looking for an unsecured loan your options are limited, but the task is not impossible. Most unsecured loans for people with bad credit come at a higher cost to the borrower. Simply stated, the unsecured loan is based mainly on your credit score, the lower your credit score, the higher you interest rate, if you can get approved.
Even with good credit, unsecured personal loans will generally have a higher interest rate. The option you have available to you with bad credit are mainly, a loan involving a cosigner or a fast cash/payday type loan.
A traditional lender will get you a better interest rate rather than the payday type lender. The biggest reason for this is, with the traditional lender, you may have the option of using a cosigner. The cosigner must be someone with a good credit rating and the ability to step in and repay the loan should you default. Generally, the cosigner is either a close personal friend or family member. When choosing a cosigner, make sure, you have the ability to repay the loan. Money has been the reason many times for a family to split and friends to fight. No amount of money is worth the risk of losing something that means as much as family or friends.
If you find that even with a cosigner, you cannot qualify for an unsecured loan the traditional way, you do have the option of a fast cash or payday loan. This loan has become more and more popular and easier to access. Little paperwork is required and fortunately, for some, they do not even run a credit report on you. For those with credit troubles, this could be the loan you are looking for.
Payday or no credit check loans only requires that you have the ability to repay the loan (an income of some sort) that can be verified and a valid bank account. Some fast cash or payday lender may require your bank account to be a checking account. This allows them the ease of depositing your loan directly into your bank account and withdrawing your payments automatically.
A payday or fast cash loan should never be a long term solution. Although this can be a quick fix for the unexpected financial situation, if you find yourself relying on this type of loan on a regular basis, you may want to reevaluate your financial situation and make the necessary adjustments to recover your credit score and beginning digging your way out of the hole you have found yourself in.
A loan that is new to the financial scene is known as a peer to peer loan. This is for a person that has acceptable credit. The advantage to a peer to peer loan is it is people like you with money to loan. This is an investment for the lender and once you have filled out the application online, people will give you different offers. Unlike a traditional lender, this route gives you more avenues. More than one person will look at your application.
Whichever avenue you do decide to take, make sure that you are ready, willing and able to repay the debt. Nothing can hurt you worse than to get a loan and be unable to repay it.