Knowing where to go to borrow money when banks won’t loan to bad credit is crucial these days. Knowing how to borrow money with bad credit when banks turn you away provides you a safety net in times of urgent need, and everyone has emergency needs for money from time to time. If your credit rating is poor, nonexistent or just plain terrible, not to worry, there are lenders that specialize in helping people with bad credit attain second chance financing.
Having no credit score that you would wish to brag about does lump you in the category of high risk for most lenders. They use your credit rating to determine your financial ability to pay back any money you borrow, and conservative lending institutions shy away from high risk loans. Luckily, there are lenders that are willing to take the extra risk to provide you a second chance at borrowing money. They offset the risk to their loans with increased interest rates in the hopes of offsetting any potential losses.
You still have options with a bad credit history because there are a few financing instruments that hold less stock in your credit score. Secured loans for instance are able to reduce the interest rates they can offer you because they protect their investment with collateral. An example being a secured car loan, because the lender has the ability to repossess the car the secures the debt. In this way the lender has added recourse in case you are unable to make your payments to offset their losses. This translates into additional interest rate savings for you and easier to approve loans.
Another type of financing that is available to you with a bad credit report are short term urgent need loans. These are typically small loans that are designed solely to provide you a cash infusion until your next payday. Because of this they are typically referred to as payday loans or cash advance loans. These urgent need unsecured loans less interested in whether you have a bad credit history because of the small amount of money being borrowed and the short term for repayment.
Urgent need loans are generally used for short term emergencies and require only a proof of ability to repay the money you borrow. A job or income will do in most cases and they can be quite useful to get you through a tough financial crisis. They can usually approve and have your money in your account within 24 hours of your completed application, it is that easy.
You should be careful when considering either of the two above loan situations as both have their unique risks to consider. First, secured loans by nature have your home or your car as collateral for your loan. In the case that you default you run the risk that you could lose your home or your car, be careful not to enter into any loan that you will not be able to pay back.
As for payday loans, it is easy to fall behind and become overwhelmed when borrowing urgent need loans. The interest rates are high, and it is important to remember they are specialty loans only designed to be borrowed and quickly paid back. You do not want to find yourself with multiple payday loans and only paying the interest from week to week. Be sure to borrow only from honest and trusted payday loan companies, and be sure to make use of the free no obligation quotes of multiple lenders before committing to borrow.