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Personal Loans With Bad Credit: The Best Options To Consider

When applying for a personal loan with bad credit, finding a lender willing to grant approval can be tricky. But, there are lending options out there all bad credit borrowers should consider.

There was a time when the only option for someone looking to secure a loan was to visit their bank branch and speak to their loan officer. These days there are several routes to take and a variety of financial packages to choose from. But what are the best options to consider when seeking a personal loan with bad credit?

Bad credit borrowers do have a few extra hurdles to clear before approval can be granted, but their chances of success can differ depending on the lender being applied to. The 3 most common places to apply to are a traditional bank, an independent lending company and an online lender.

The question is, from which of the 3 is approval despite poor credit scores most likely. The answer to this comes down to the particulars of your application and the information provided. Getting the personal loan is also dependent on aspects like affordability.

Applying For A Bank Loan

Traditional lending institutions, like banks, are known to have very stringent lending policies. These apply across the board and, to a large degree, even your friendly neighborhood loan officer is unable to do anything if the policy dictates so. This makes getting a personal loan with bad credit quite difficult.

Basic criteria that applicants must meet include proof of employment, sufficient income, and confirmation that repayments are comfortably affordable. This means no unnecessary financial strain is placed on the applicant. In fact, securing approval despite poor credit scores is chiefly reliant on the debt-to-income ratio the applicant has.

This ratio states that no more than 40% of excess income can be spent on repaying the personal loan. So, should the excess income be $1,000, repayments can be no more than $400.

Applying To A Lending Company Loan

While banks have strict policies that loan officers rarely bend, independent lending companies make their profits by listening to bad credit borrowers and finding the best loan package for them. With that in mind, they are much more likely to grant a personal loan with bad credit.

There are some compromises to make though. In order to earn approval despite poor credit scores, it is necessary to accept a higher interest rate. This can be several points over the best bank rate, so the overall cost of the loan is pretty high. However, the repayment structure is typically long, ensuring the actual monthly repayment is comfortably low.

The criteria are pretty much the same as for any loan, but approval is much more likely. And in fact, these lenders are the best at finding the right personal loan deal. When approval seems like a long shot, then a lending company is a very good option.

Applying For A Loan Online

This is fast becoming the most popular option, with online lenders often offering the lowest interest rates and the best repayment terms around. And in many cases, bad credit scores are ignored completely, so the chances of getting approval for a personal loan with bad credit are quite strong.

While it is true that convenience is another key advantage, it is the practical issue of affordability that is the biggest draw. Finding the right loan deal is also easier online, especially with the development of comparison sites that can highlight deals that best fit specific conditions and budgets.

With approval despite poor credit scores very likelyFree Articles, it is also a wise choice when seeking a personal loan without the backing of an excellent credit record. But remember to check out the reputation of any online lender before committing to any loan deal.

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Donna Hammond is the author of this article. For more information about Bad Credit Motorcycle Loans and Rv Loans for Poor Credit please visit her website at

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