Poor Credit Loan – Getting a Loan even with Poor Credit

2007-03-08 10:33:40

( Financial )



If your credit history is less than perfect, seriously damaged or anywhere in between, then you may have found that obtaining a loan is difficult. But it’s not impossible. If your poor credit status has prevented you from qualifying for a loan, don’t give up. There are financial companies who are willing to give bad credit borrowers a second chance through a poor credit loan.

A poor credit loan is a loan on offer to people with bad credit rating, including those who have declared bankruptcy. The borrower can use the money for loan consolidation or other personal purposes. There are also bad credit mortgage loans.

Poor credit loans often have higher interest rates, more restrictions and the loan amount may also be lower than standard loans. This is because of the higher risk to financial institutions of the borrower not paying the loan fully or on time.

Here are 2 types of Poor Credit Loans that are available:

•Secured Poor Credit Loan – This loan requires collateral such as your house or other assets. The loan amount depends on the collateral value and other factors like your credit rating and outstanding debt.

•Unsecured Poor Credit Loan – This loan is not secured against your personal property. It poses even higher risk to the lender so it may be harder to obtain one. It’s also important to note that even if your property is not attached to your loan, courts do have the capacity to take it away in the case of non-payment.

Before completing a Poor Credit Loan Application,

•Try to apply for a regular loan first. Consider a poor credit loan as a last option and when you’re convinced you can’t get a loan from anywhere else.
•Do research on various reputable financial institutions. The internet is a good place to start for information on loan programs.
•Ask lenders about their terms and conditions, interest rates, penalties, compulsory insurance or any additional charges.

Above all, borrow an amount that you can repay comfortably. Defaulting on a poor credit loan will make your financial problems worse than it already is. For example, non-payment on a secured personal loan puts your property at risk.

Think of a poor credit loan as the perfect opportunity to restore your credit status. Show you are responsible by making timely payments. This will rebuild your credit standing overtime.


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