A Personal Loan for Bad Credit, is it Difficult to Obtain in 2021?
You might be surprised to find that you CAN apply for a personal loan even with bad credit. Sure, your bad credit score will prevent you from getting the best interest rates, but you will still have fees that are much more flexible than those associated with a payday loan are.
What is a personal loan?
A personal loan, whether requested from a bank, your line of credit, or a trusted online lender, comes down to the same thing. Typically, your loan is paid off in fixed monthly amounts over a period of 2 to 7 years and has annual interest rates ranging from 6% to 36%.
Most of them are not guaranteed. A secured loan is a loan for which the consumer offers collateral in order to secure the loan amount. In the majority of cases, it is cheaper, but you run the risk of losing your warranty (whether it is your property, vehicle or other valuable item) if you do not perform the payment.
Personal loans are generally tied to relatively low interest rates, while the limits on the amounts you can borrow are quite high. For many people, a personal loan will even have a lower interest rate than a credit card – unless you can get one at 0%! In addition, if you have multiple high interest credit card debt, you can consolidate your debt in one place at a lower rate.
When deciding whether to approve or deny your application, lenders base their decisions on several factors, including, but not limited to, your credit rating, salary, and debt ratio. Bad credit personal loans guaranteed approvalwould benefit from lower interest rates, but remember that it is not uncommon to get a loan even if your score is 600. In addition, if you see yourself turned down for a personal loan, you can always consider a quick cash loan.
Many professional lenders will be able to assess your file and provide you with estimated interest rates without negatively affecting your credit rating. Some loan markets will even allow you to compare the rates of several different lenders, all in one place. If you meet all the conditions and your loan is approved, the money could be deposited into your bank account within 24 hours.
Reasons to get a personal loan
The reasons for applying for a personal loan are varied. This is because you might need money for anything and you can spend your loan as you see fit. Of course, it is highly recommended that you use your loan to improve your financial health by consolidating your debt or increasing the resale value of your home. However, the choice is yours. Below is the list of the most common reasons for applying for a personal loan.
- Get married: We all know that weddings, even when put on a budget, tend to be expensive. Many couples choose to apply for a loan to pay for their marriage, and then make the small monthly payments afterward.
- Home renovations: Whether it’s changing the roof, adding a second bathroom or expanding the house, renovations are expensive and many people apply for a personal loan to help them pay off the home. bill.
- Debt Consolidation: Trying to make payments in multiple places each month and assuming each high interest rate can be a real headache, require a lot of organization, and cost more than you can afford. By consolidating all your debts in one place and enjoying a more reasonable interest rate, you will be feeling financially relieved in no time.
Large Expenses: Many people turn to a personal loan when faced with a sudden, high expense, like buying a new vehicle or having an emergency medical bill.
How to get a personal loan
If you have decided to go for a personal loan, then now is the time to do your research! Always compare the interest rates of several different lenders. Of course, the one with the lowest fees is the best choice. Many lenders offer the option to prequalify online and even offer to view estimated interest rates without affecting your credit rating. It is therefore preferable to take advantage of this possibility whenever possible.
Can I get a loan without a credit check?
To be honest, the answer is both yes and no. Yes, because if you choose a loan without a credit check , it is possible, but you will have to face exorbitant interest rates and you will have to guarantee the loan with your next salary. And no, because if you’ve chosen to borrow from your bank or a traditional credit union, then a credit check, whether flexible or rigorous, will be an integral part of the process.
A low credit score around 600 is allowed, but a score below this level would make it very difficult to obtain a personal loan with bad credit. A bad credit score also means that you will have to pay higher interest rates and fees. It is therefore often recommended that you take a few months to improve your score before applying for a personal loan.
Average interest rates for personal loans based on your credit rating
An excellent credit score is considered to be between 720 and 850 and these people typically enjoy interest rates ranging from 10.3% to 12.5%. A good credit score is rated between 690 and 719, and interest rates in this range are typically set between 13.5% and 15.5%. Average scores of 630 to 689 are assigned interest rates between 17.8% and 19.9%, while scores of 300 to 629 can expect rates of 28.5% to 32%. .
For exceptional credit
If you have a great credit score, between 720 and 850, you will enjoy a lot of benefits. You might get rates of 10.3%, but they can go as low as 5.99% in some cases. You will have excellent negotiating ground and you will be able to choose your lender, while benefiting from the lowest costs.
If your score is between 630 and 689, chances are you are having trouble getting a loan with a reasonable interest rate and affordable fees. Although it is much less advantageous than rates with a good or a great score, you can still be successful in finding a personal loan at 17.8% or less. Do not worry too much; improving your credit score can be done in a matter of months!
As we have already mentioned, it is not impossible to get a loan with a bad credit rating, but you will have to incur both high interest rates and high fees. With a score between 300 and 629, you probably won’t find anything better than 28.5%, but even with a rate of 30%, it is better to choose a personal loan rather than a payday loan, at all times. .