A Variety Of Choices for the Bad Credit Consumer
In today's financial world, consumers with less than stellar credit need not fear disqualification for fast cash because of a few blemishes on their credit report. Granted, those with a good credit rating benefit from more options than their bad-credit scoring counterparts, and generally-speaking, lending institutions are at times reluctant to do business with the latter. Nevertheless, Americans finding themselves in the economic gutter should take consolation in the fact that a variety of bad credit personal loans and providers exists in the marketplace- enabling prospective borrowers to purchase a new car, launch a new business, book a flight to their getaway destination, pay off their credit card bills or cover any type of expense.
What follows is a discussion of the two major types of bad credit personal loan options available to consumers:
1. Bad Credit Payday Loan:
This is a personal loan for people with bad credit. Applicants are not subject to a credit check; the lender only verifies the information furnished by the former. The requirements for completing the bad credit payday loan application are simple- The prospective borrower must provide 1) a form of identification such as social security, 2) proof of employment, 3) his address, 4) his monthly salary ($1000 per month is the minimum for qualification), as well as 5) work and home numbers. Consumers do not have to pledge any security or provide any guarantee to obtain bad credit payday loans. Approval of the application is a speedy process, and borrowers receive the funds within 24 hours.
2. Bad Credit Personal Loan:
This kind of loan is specially designed for consumers with poor credit and who are in need of a personal loan. More specifically, the loan is ideal for those who fail to pay their bills on time and/or whose debt-to-income ratio is a bit elevated. Although the majority of lending institutions that offer bad credit personal loans to customers with a tarnished credit report will tack on an additional 2-3% to the existing prime rate, they will waive the credit check requirement. Most creditors limit the amount that consumers can borrow to a few thousand dollars. By making timely payments on their bad credit personal loan, borrowers will eventually be able to improve their credit.
One variation of this funding source is the secured cash advance loan, which requires borrowers to put up some form of collateral. A secured personal loan will typically offer the following features:
- eligibility despite past credit troubles
A second variation of the bad credit personal loan is the unsecured personal loan, which is typically short-term in nature and does not require that the consumer pledge security. It is intended for individuals with either no credit or really poor credit. The bad credit unsecured personal loan is granted solely upon submission of a prospective borrower's signature; it need not be backed by collateral or have a co-signer. Consumers are not required to be homeowners, and minimal documentation is needed for approval. The rates associated with a bad credit unsecured personal loan differ according to the borrower's credit profile.
A third variation of bad credit personal loans is the guaranteed bad credit personal loan, which requires the borrower to obtain a co-signer for loan guarantee purposes. This serves as a protective measure for the creditor vis-à-vis individuals with a poor credit rating or who are borrowing for the first time. Since the loan is guaranteed, a borrower is eligible for the funds irrespective of his or her bad credit status. The lender will examine the guarantor's credit-worthiness in assessing whether or not to issue the guaranteed bad credit personal loan. Once the borrower acquires the funds, the co-borrower or guarantor becomes responsible for the debt if the former defaults and is not forthcoming in his payment obligations. The guaranteed bad credit personal loan is usually not approved for very large sums of money.