Types of Bad Credit Loans
Getting a loan from a bank when you have a bad credit score isn't easy. If you score is too low, it won't even be possible. This can make getting by in life difficult when you need money. Luckily, banks are not the only places that will give out a loan. There are many different types of loans that are available to people with bad credit scores. Most of these loans can be conducted entirely online, or from your home. While many of these types of loans will approve you if you have a bad credit score, that doesn't mean you should use them. Below are some of the most common types of bad credit loans, and the positives and negatives for all of them.
- Logbook Loans - A logbook loan is when you use your vehicle as collateral to secure a loan. To be eligible for a logbook loan you usually just have to be a legal resident, the owner of a vehicle, and show an ability to repay the loan. If you can do all of this, you can take out a short term loan, usually for no more than fifty percent of your vehicle's value. You then make monthly payments based on how much you borrowed and for how long. The best thing about logbook loans are that you can continue to drive your car while the loan is out, so your life does not get interrupted. The bad thing about logbook loans is that if you fail to meet your payments, you run the risk of losing your vehicle. You can also not get one if you don't own a vehicle, so this option will not be open to a lot of people.
- Guarantor Loans - Even if you have a bad credit score, you may know someone that has a good credit score. With a guarantor loan you can ask this person to vouch for you so that you can get the loan. You can then use their credit score to get the money that you need. Their score will not be affected as long as you make your payments on time. The good thing about guarantor loans is that you don't have to put up an collateral, and you get great interest rates. The only drawback about guarantor loans is that if you fail to make your payment, you run the risk of not only damaging your friend/family member's credit score, but also your relationship with them.
- Doorstep Loans - If you want convenience, you may want to consider a doorstep loan. With this type of a loan you can find a company online, then they will send a representative to your home to work out the loan details. Then, when payments are due, this person will come back to collect the money. They can also discuss financial advice with you if you are having any problems making your payments. Doorstep loans allow for a more personal loan experience. The biggest drawback to these types of loans is their interest rates, which tend to be a little higher than some other types of loans.