Finding an Unsecured Loan - Payday Lenders Are Not the Only Option
If you have bad credit and need a loan, do not feel that you can only resort to predatory payday lenders. These strategies will help you secure a fast loan with better rates and terms.
Know Where You Stand
No matter the bad press that major financial institutions have gotten as a result of the recent financial collapse, the most likely place for an individual to get a loan is from a bank and often the same bank where he has a current account. Yet, this is not always the best bet anymore since many banks reject anyone with a blemished credit outright in order to lower their overall risk. The same is true for credit card companies as well. They are just not willing to take risks on those with a shaky financial past.
Therefore, if you have been rejected recently, chances are that you will be rejected again. What you need to do in order to secure financing from traditional financial institutions is change your credit and the best way to do this is to pay back a loan in good standing. However, it is not likely that you will be able to secure that loan from a traditional lender. Furthermore, continuing to seek loans from these institutions will further harm your credit due to the number of inquiries.
Do Not Trust Payday Lenders or Pawnshops
Once someone with bad credit is rejected by traditional sources, the easiest and most often used next step is the payday lender or local pawnshop. These people specialize in giving loans to anyone and therefore getting money is easy. Yet, the results that they give you are often more harm than good.
Payday lenders do not ask for collateral, however the practices that they do employ have led many people to liken them to loan sharks. The interest charged on a payday loan will be exorbitant due to the higher risk and generally the payback period is non-negotiable and limited.
Pawnshops are no better, the only difference is that they ask that you put up some of your possessions as security against the loan. They will then “hold on” to your things until you pay them back. The problem is that their assessment of your possessions’ value is often far below their actual worth and many pawnshops are known to turn around and sell your things if you are even one day late in your payment.
Consider Using an Online Lender
Online lenders are the middle ground in today’s tough financial times. If you have bad credit, this option can be a lifesaver in terms of money available as well as the terms given to you in borrowing that money. Generally, online lenders ask for proof of identity, employment and residence. They will almost always offer a loan in some amount, though not always as much as offered at a bank. However, the interest will be better than the payday lenders and paying back an online lender’s loan will be a great step towards improving your credit score and setting you up for the future.
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ABOUT THE AUTHOR
Joycelyn Crawford is the author of this article. For more information about Easy Loans for Bad Credit and Easy To Get Loans please visit her site http://www.easyloanforyou.com