Online Personal Loans With Bad Credit: 3 Online Loan Risks Worth Taking


Low credit scores can play havoc with loan applications, but there is no reason to believe it impossible to secure a personal loan with bad credit. In fact, there are plenty of options available to bad credit borrowers. The only question is which of them is the best option given their specific financial situation.

It is always preferable to get a loan with a low monthly repayment, but approval usually means accepting compromises and loan terms that are less than ideal. In many cases, they are high-risk online loans, where the pressure to meet repayments is high, while for lenders, the chances of getting their money back is low.

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The latter usually means higher interest rates are charged, making the personal loan less affordable. However, it is important to weigh up the pros and cons involved first. Here are just 3 of the most common options available.

1. Fast Access Payday Loans

A high-risk loan, this option nonetheless provides a high degree of approval certainty. In fact, it is rare to be so confident of getting a personal loan with bad credit without any collateral provided. However, there are compromises to accept.

First of all, the loan limit is quite low with most lenders offering a maximum $1,500. Given that approval can be is granted within minutes, and deposited into the account of the borrower within a few hours, it is ideal in dealing with financial emergencies. But it is the terms of repayment that make them high-risk online loans.

Granted against an upcoming paycheck, interest rates are still extremely high (up to 30%) and the repayment term is extremely short (14-30 days). This personal loan is repaid in full directly from the paycheck, leaving little over to meet normal monthly expenses with - a $1,500 loan could require a single repayment of $1,950, for example.

2. Person 2 Person (P2P) Loans

This is one of the most progressive loan options available online, and one that has its positives and negatives. When seeking a personal loan with bad credit, it offers affordable access to required funds without having to worry about the influence of bad credit scores over the interest rate and terms.

These online sites connect individuals rather than applicants with lending institutions. The required sum and repayment limit are advertised by the borrower, and those individuals who are willing to invest in the loan can do so. Considered high-risk online loans for lenders, it is little more than a leap of faith with no recourse should the borrower default.

For example, if $4,000 is needed but your monthly repayments budget is $150, then four individuals may invest $1,000 each. When the loan is repaid after 3 years, they will each have earned back $1,350 - that is $1,400 over the borrowed sum, much more than a personal loan from a traditional lender.

3. Cosigner Loans

A third option is a cosigner loan, which is arguably the most affordable option when seeking a personal loan with bad credit. The interest rate is kept low by a cosigner, who guarantees the monthly repayments will be made without fail. This means the degree of risk a lender faces is effectively removed, and because of this a low interest rate is charged.

However, this option can be considered a high-risk online loan by the cosigner since they have promised to take full responsibility should the borrower be unable to make the payments.

They must be subjected to a credit check, with lenders needing to know if they have a good credit history and ample income. If they pass scrutiny, approval of the personal loan is practically guaranteed.


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