There is a common misconception that those who are looking for a personal loan with bad credit histories to their names are destined to see their efforts frustrated. The majority of traditional lenders are not interested in granting loans to bad credit borrowers, and those that do offer less than affordable options.
But there are choices to consider, with other loan sources offering loan deals that vary from excellent to competitive. Of course, getting approval with poor credit scoresis not easy, and there are criteria to meet before any chance of getting the green light. However, it is at least encouraging that rejection is not a foregone conclusion.
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But what are the personal loan options available to those of us with poor credit histories? Here are just 3 of the most common loan sources, and the best ones to look at before making any decision.
The Traditional Bank
Traditional lenders, like banks, are synonymous with expensive loans and draconian lending terms. The global recession has caused many institutions to lose money, and they seem to be set on recovering their losses. As a result, applicants for personal loans with bad credit face higher interest rates and less flexible repayment schedules.
However, there are some good deals to be had, if these conditions are accepted. For a start, getting approval with poor credit scoresis most likely when applying to your local branch, where your bank account is. This is logical, since they know their customers extremely well.
The stronger leverage allows some applicants to get a slightly better loan deal. However, for those who apply to unfamiliar banks, the chances of getting a personal loan are pretty slim, with higher interest ensuring that the deal is often more expensive than is worthwhile.
Private Lending Companies
While it can be difficult to get approval from a bank, it is easier to secure a personal loan with bad credit from a private lending company. These are experts in lending to bad credit borrowers, with terms that are designed to suit the needs and budgets of the particular applicant.
A perfect example of this is that their interest rates are high, but their repayment schedule is longer to ensure that the actual repayment sum each month is low and affordable. So, while the amount of interest paid over the lifetime of the loan is very high, it is possible to get loan approval with poor credit scores.
Often, simply getting the loan is the key factor for borrowers, so the high cost is a worthwhile compromise. However, shop around to see which companies offer the very best deal on personal loans.
Online Lenders
Finally, the favorite amongst consumers is to seek loans from online lenders. The very best deals are to be found online, whether it is to buy or borrower. Getting a personal loan with bad credit from an online lender is often the most affordable option.
Just like the lending companies, online lenders are specialists in lending to bad credit borrowers, so securing loan approval with poor credit scoresis probable rather than possible. It is important to shop around, and comparison sites allow this to be done very quickly.
Of course, check the reputation of the lenders out before agreeing to any personal loan deal. So, visit the Better Business Bureau website, or the Verify1st website, before making a decision.
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