Bad Credit? Unsecured Personal Loans Are Available Without Resorting To Payday Lenders

In today’s tough financial times credit card companies and banks are rejecting more applications for personal loans and credit cards than they have in the past. As a result, those with poor credit often either stop even trying to borrow money in the first place or utilize less dependable sources such as pawn shops or check cashing agencies who loan small amounts of money at high interest rates. Many of these people with bad credit, or just really bad marks on their credit, then feel discriminated against by the major banks when they try to get loans or line of credit, since they have a history of being swindled by lenders. However, there are options when it comes to securing financing for those with bad credit or bad marks on their credit report.Know Your Standing with Banks and Other Popular Financing SourcesDespite tough times and negative associations with Wall Street, most people still secure most of their financing from banks, often going to the bank where they hold an account first. While this makes a lot of sense in theory, many banks are rejecting almost every loan application that they see from consumers with and blemish on their credit report as a means to reduce their overall market risk. Credit card companies are following in the same footsteps and the requirements for borrowers are very similar between all banks. This means that if you have been rejected once or twice, you will continue to be rejected without some major change. Therefore, you waste your time, the bank’s time and risk further harming your credit report with too many inquires if you continue to seek financing through a traditional lender.Pawnshops and Payday Loans Hurt More than They HelpThe most frequent next step that a lot of borrowers take when rejected by traditional lenders is to use a pawnshop or payday lender as a means to secure financing. As opposed to banks and credit card companies, securing a loan from these institutions is simple. However the results are almost always disastrous. Pawnshops ask that you give them your personal possessions as collateral against your loan, but they often appraise these pieces at a fraction of their real value. They will then often give borrowers a very short period in which to pay the loan back causing them to default quickly. The pawnshop then turns around and sells the possessions that the borrower gave them as collateral as soon as the day after the payment is missed.Payday lenders do not ask for possessions as collateral, but often operate in a similarly cutthroat manner. Some even compare them to loan sharks. Payday loans charge interest that is easily dozens of times the current rate offered at banks and then say that they can do this because their loans are “higher risk.” While they do certainly loan those who the banks reject, their rates are far and above what they need to be based only on risk. In general, those who use payday lenders and pawnshops end up hurt more than they are helped in the end with such loans.Online Lenders Provide an AnswerThe current financial times are tough, no doubt. So securing a loan with bad credit is difficult, but by no means impossible. Even those with several bad marks and serious issues with their credit have had success with online lenders. Generally, you only need to prove your identity, a source of steady income, current residence and you can get a loan. Generally, the amounts offered online are less than by the banks, but the terms and interest are far better than those offered by pawnshops and payday lenders.