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Types of Bad Credit Loans

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There are times in some of our lives where we may be irresponsible when it comes to money. When you don’t use money wisely you are often faced with bad credit. A bad credit history is hard to get rid of. If you are in a bind and need to take out a loan for one reason or another (bills, business expenses, home or car repairs, etc.) there are many loan options for people with bad credit, even though when it comes to loans bad credit can be limiting. Below we will explore these options to help you better understand what is out there

Guarantor Loan

Guarantor loans are loans for those borrowers who may have bad, little or no credit but have someone who is willing to guarantee the loan should the borrower default. You are asking someone to sign the loan along with you so that if you don’t make your payments they will go after them. These loans are typically longer in payback terms and lower interest rates compared to other bad credit loans. However, it is often hard to find someone who will take on the financial risk for you.

Payday Loan

A payday loan is a loan that is given to someone without a credit check  and typically a short payment period. You would use something like this if you don’t have the money for something and need it right away but can pay back after you get a paycheck (hence the name). They are great because they don’t check your credit history and it does not leave a footprint in your financial history. However, you pay a crazy amount in interest and do only have 30 days to pay it back which can be burdensome. The regulations on this type of product have really grown so the amount of businesses that offer them are limited.

Doorstep Loan

A doorstep loan involves a lender visiting someone at their property and offering what is almost always a cash loan. This product is typically offered in poorer neighborhoods and is less common than other bad credit loans. Everything is done in person, the application and the actual repayments. Similar to the payday loan they are good because you don’t have to have good credit (have no credit check) and you can get cash on the spot. However, they have extremely high interest rates, lower loan amounts, and possible weekly payments in person.

In conclusion, these are a few options for those who need a loan and have bad credit. Depending on your situation, one may seem better than the others.