- Personal Finance
Bank Loans For People With Bad Credit
There are many available bank loans for bad credit. It is very important that you know what your needs are when it comes to applying for a loan, because you want to make sure that you get the right type of loan. Borrowing with bad credit is a tricky game because you don't want to make your financial situation worse than it already is.
Bad credit can be very embarrassing. No one wants to have to tell others that they have defaulted on a bill in the past. It is however, absolutely necessary that you are completely honest with your lender. This will save everyone a lot of time, and point the lender in the proper direction in seeking the right loan for you. If the lender believes that your credit history is snow white, he won't be too happy when he runs your report to find out that it isn't.
Of course, everyone's top priority is getting as much as they need, while spending the least. There are several factors involved in this. The first is whether or not you have any collateral. The most important piece of collateral that you may own is your home. The entire value of your home will not be considered collateral, but rather the amount of equity that you own. Obtaining a bad credit bank loan while using your assets as collateral is what is known as a secured loan and it's definitely the best type of loan to get for people with bad credit.
Bad credit bank loans are a lot more likely if you have a home. If you don't, there are some other options that you can look at but you probably need to consider looking for a cosigner that can help you out. Most people won't want to cosign but sometimes it's an option that you'll have to consider.
On the other hand, if you don't have any collateral that you can put down for the loan, it's going to be a little more difficult. These loans are called unsecured bank loans, and are also called bank loans for people with bad credit - they can be rather tricky. They can also be quite costly. Because most traditional lending institutions will most often reject an application from an individual with bad credit, these same individuals are forced to go elsewhere.
Private banks (those who are not members of the FDIC) offering loans to individuals with bad credit are not
limited to the same interest rate limits as traditional lenders. As a
result, the interest rates for people who have poor credit can be very
high. At the end of the day, this means that the person with bad credit
will pay more to borrow the same amount of money as someone with good
If you are seeking a loan for bill consolidation, this may be a good idea for you. This is an excellent way of repairing your damaged credit because it will in effect zero your revolving credit and the amount of the revolving credit that you're using is one of the major factors that determines your credit score. Just remember to always make your payments on time. Do not be tempted to borrow more than you need. You will have to pay this back with interest.
You may want to seriously consider whether taking a loan at this time is absolutely necessary for you. If you do not have an immediate need for this money, you will want to take the steps to first repair you poor credit. In the long run, this will save you more money than can be imagined. Using bank loans with bad credit honestly is risky business. Bad credit generally equals high interest payments and obviously that's going to get you into a lot more trouble.
Things To Learn About Credit
Overall, your strategy for getting a bank loan for bad credit is going to depend largely on the type of loan that you need to get. Since I really want to help you I have created some additional articles that should really help you to be able to find the right loan.
The first type of loan that people generally look for is the signature loan. Signature loans for people with bad credit aren't exactly the easiest loans to get. Your credit and employment are the only things that matter with these loans. If you have semi-bad credit you can expect to pay about 15% interest for these loans.
Auto loans for bad credit are a lot more common, because the bank has an asset they can take if you don't make your loan payments.
For those with bad credit, commercial mortgage loans generally don't work. This is the case because the loans are generally quite large. You will want to find a business partner if you need to take out this type of loan.
I just published another hub that tells the honest truth about bad credit bank loans. Take a look at it if you want an honest dose of reality.