When it comes to personal loans, there are two types that you can apply for: secured and unsecured loans. However, if you are struggling to qualify for a personal loan, you should consider other loans for bad credit worthiness.
Secured and unsecured personal loans with bad credit
Traditional personal loans can be either secured or unsecured. Secured loans require that you deposit something of value (also known as collateral) like your car, savings account, or home to secure (or secure) the loan. The lender can repossess the collateral if you default or default on payments. This makes them less risky for a lender, which also means that they usually come with more favorable terms like lower interest rates and lower skill requirements.
Unsecured loans, on the other hand, are the more common of the two and do not require collateral. Since these loans do not require collateral and therefore pose a higher risk for lenders, they usually come with higher skill requirements and higher interest rates. The loans on this list are all unsecured personal loans.
Student loans with poor credit ratings
If you are trying to cover college expenses, a bad credit student loan is probably the direction you want to look. Although private student loans typically require good credit ratings, borrowers with poor credit ratings can take out government student loans that do not require a credit check. Federal loans also have the most flexible repayment terms, including waiver if you work in the public sector or choose specific repayment plans.
Auto loans for bad credit
A car loan is a secured loan that uses your car as collateral, which means the lender can repossess your car if you default or default on payments.
Similar to personal loans, auto loan qualification requirements vary for each lender and dealer. While we recommend a credit score of at least 670 for the best deals, you can still qualify for a lower score car loan as long as you meet the Debt-to-Income (DTI) requirements and make a larger down payment.
Payday Loans For Bad Credit
Payday loans are short-term small dollar loans (usually up to $ 500) that you pay back as soon as you get your next paycheck, usually two to four weeks after you take the loan. Many lenders do not require a credit check, which is often tempting to people with poor credit ratings. However, don’t get your hopes up. Payday loans come with a lot of their own risks and sky-high fees. First, consider other alternatives, such as: B. Personal loans or borrowing money from friends and family.
Home loans and HELOCs for bad credit
If you have enough equity in your home – the current market value of your home minus your remaining mortgage balance – you may be able to obtain a home equity loan or a home equity line of credit (HELOC). Either of these allows you to pull against your home, meaning your home will secure the transaction and the lender can repossess it if you fail to make the repayment. However, home loans are paid out as lump sums, while HELOCs limit you to withdrawing funds as needed.
However, borrowers with poor credit scores are unlikely to qualify for these loans. Most traditional lenders require a minimum score of between 600 and 620. There might be a specific lender or credit union that makes an exception, but this is not common. People with a score of less than 600 would have to go through hard funders such as private investors or corporations, not a bank. While hard money lenders are more flexible, they are usually a more expensive option.