Money is such an important part of daily life, which is why personal loans for bad credit with low payments are so important. It is almost impossible to go through your existence without some form of borrowing. Sometimes people borrow money to buy a house, a car or even mundane things like clothing. For most people, getting a loan is done with the aim of quickly being able to reimburse it. At times, life can take an unexpected turn and you can default on your loan. That is what can lead to bad credit score. If you have a history of personal loans with bad credit, it can become extremely difficult to get further borrowing.
- What’s the Catch?
It is important to bear in mind that personal loan for bad credit and low payments don’t often go hand-in-hand. That is because lenders like banks and credit agencies are afraid that you might never pay them. In order to protect themselves, they make you pay a higher interest rate and reduce the repayment period. The fact that you’re paying a higher interest rate is a way for lending companies to get their money back even if they are only able to make small profit from it.
Some people think that having a bad credit history is what most banks and lending agencies look at. In most cases, in order to get personal loans for bad credit and low payments your credit score is more important than your credit history. For example, if you need money to buy a car, most banks will probably not want to give you anything because they are afraid you might not be able to pay them back. However, there are other credit companies that you can contact when you need money for a new car. They charge you more but they are likely to give you what you want.
- About Interest Rates
Most banks and credit lenders charge an interest rate from 4% to 8%. For those with a low credit score, you should not be surprised if the rate is even higher. That might sound like extortion, and it is. However you need to take a look at things from the point of view of the lender. The lender is taking a risk by giving you money and knowing there is a greater chance you will never pay him back. These types of loans are for amount less than $5000. The higher interest rate often compensates the lack of collateral.
- Other Types of Lenders
There are other types of personal loans for bad credit without low payments. If you need for example $500, and you already have bad credit score, you can get a quick loan from lenders. However, you will have to sign a contract that will include high interest rate and also that will allow the lender to directly deduct part of the money from your bank account on your pay day. This is a form of collateral that will ensure that you don’t spend the money before the lending agency can get their hands on it. Basically it is possible to get personal loans even with bad credit but you need to shop around and be willing to pay a higher interest rate.
Personal loans for bad credit and low payments are out there.