Bad credit scores make it difficult to borrow money from banks and other traditional banking institutions, and even if your loan is approved, it comes with exorbitant interest rates and high monthly payments. This is where bad credit loans come in. These loans are specially created for people with poor credit scores or no credit history. Bad credit loans can be secured or unsecured and are available in various options. Discussed below are four types of bad credit loans.
1. E-transfer payday loans
E-transfer payday loans are loans issued as cash advances, paid back on the next payday. They come in handy during emergencies or when you require fast cash. You can utilize money from e-transfer payday loans as you deem fit, including paying bills, unexpected emergencies, and more. E-transfer loans have numerous benefits, including the following:
- You don’t require good credit: Unlike conventional loans, where your credit score impacts your eligibility, you don’t need good credit to access an e-transfer payday loan
- Accessibility: E-transfer payday loans are conveniently accessible, particularly in emergencies. The loans are available round the clock, and you can complete your application online and get the funds within minutes
- They’re unsecured: E-transfer payday loans don’t require any collateral, meaning there’s no risk to your assets
If you have bad credit and need cash quickly, research can help you find the most reliable lender.
2. Home equity loans
Home equity loans allow you to use your home as collateral when borrowing money. These loans are secured and perfect for those with poor credit. However, home equity loans for people with low credit have high interest rates. If you have bad credit or no credit history, you can improve your approval chances by:
- Building more equity: You can pay more toward your mortgage or organize for a new appraisal if home values in your region have risen
- Lowering your DTI: Prioritize paying your debts to reduce your DTI
- Finding a cosigner: With the help of a cosigner with a solid credit score, you can boost your approval chances and lock in better terms
3. Vehicle title loans
Title loans are secured, short-term loans where you use your car’s title as security. When it comes to auto title loans, your credit score doesn’t influence your eligibility. They don’t involve credit checks, making them ideal for people with poor credit or no credit history. To be approved for a title loan:
- You must own your vehicle outrightly, meaning there shouldn’t be any outstanding financial obligations or liens on the car. This ensures the auto loan lender has an undeniable claim to the automobile as collateral
- Age and identity requirements: Lenders need valid identification documents to ensure they’re dealing with the right person and adhering to legal requirements. This not only prevents fraud but also safeguards both the lender and the borrower
Some lenders may also require proof of income to determine your ability to repay the auto title loan.
4. Pawnshop loans
Pawnshop loans are an excellent option for those with poor credit because lenders don’t conduct credit checks. This means your credit score won’t affect your ability to secure a pawnshop loan. To access a pawnshop loan, you must present a valuable item as collateral and prove it belongs to you. Note that you risk losing your asset if you don’t pay back the loan as agreed.
Endnote
Bad credit loans come in handy for those with low credit ratings. Understanding the different types of bad credit loans and their pros and cons can help you find the most suitable option.
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