Bad Credit Unsecured Personal Loans -- Beyond Payday Lenders
Traditional lenders are reluctant to make personal loans to folks with less than golden credit histories. Bad credit borrowers should shop online, avoiding the stingy pawnshops and legal loan shark payday lenders.
So, they end up using pawnshops or check cashing places to borrow small amounts of money at high interest rates that are just shy of being usurious. Sure, this can lead to feelings of discrimination or being taken advantage of. But, there are ways to secure a financial boost when a serious need arises even with a highly blemished credit history.
Forget Banks and Credit Unions
Of course, banks and similar institutions are still the most frequently used sources for loans. Approaching a loan officer at a bank or credit union where you keep your money, is the most logical step that most folks take to land a loan. But these traditional lenders are operating under a self-imposed credit crunch to minimize their risks and simply will not finance any consumer with less than sterling credit history. Credit card companies follow along. If you have been rejected by one traditional lender, you will be rejected by the others. Credit policies differ little from bank to bank. So, there is no need to keep trying. Also, each credit application puts another ding on your credit history.
Forget Payday Lenders and Pawnshops
Having been rejected by traditional lenders, many folks turn to pawn shops and payday lenders. Though not hard to get an approval on a loan request, the consequences of using these lending services can become financially devastating. A pawnshop requires collateral in the form of valuable property, usually jewelry, electronics, or musical instruments. Of course, the appraise the property at a small fraction of what it is really worth and require payments within a very short time. Many borrowers cannot redeem their property by the due date and show up a day later only to see their property already on sale.
Payday lenders have no collateral requirements, but they are really nothing more than legal loan sharks. Even though they are governed by state laws, the interest rates they charge are hundreds, yes hundreds, of times higher than what a bank or credit union would charge. They attempt to excuse their loan shark fees and rates to be caused by the tremendous risks they take. They are more than recompensed for their risk. Extensions are usually available, and often renewing the loan on a monthly basis becomes part of a borrowers budget and they sink deeper and deeper into debt.
Online Lenders the Best Bet for Bad Credit Borrowers
It goes without saying that finding a loan for a person with a poor credit history is not an easy task, especially in these recessionary times. But the possibility exists. Many folks in need of a cash infusion can find it online with fees and rates not nearly as usurious as those exacted at storefront payday lenders or pawnshops. They do not offer loans in the amount that may be offered by banks, and their rates are not as low as traditional lenders. The requirements are not that stringent. Proof of identification, proof of residency, proof of steady employment, and a direct-deposit bank account are usually all that is needed for a loan approval. Loans can range from $100 to $1500, with $500 being the usual.
So, forgo the traditional lenders, forgo the legal loan sharks and the stingy pawnshops. Start shopping for a loan online. The application process is swift and you can usually have cash in your account within 24 hours.
Source: Free Articles from ArticlesFactory.com
ABOUT THE AUTHOR
Lara Sawyer is the author of this article. She works successfully as a financial advisor with years of expertise on Guaranteed Bad Credit Loans. She publishes informative articles about Money Lenders for Bad Credit, home loans, credit cards, auto loans, business loans and others at http://www.fastguaranteedloans.com