There are many different types of loans out there, many of which have been designed specifically for people with bad credits. Two popular installment loans that people can get are the secured and unsecured options. When you apply for a loan, your personal information will be checked and this is one of the main determining factors about whether or not you will be accepted.
If your credit score is lower than average, you won’t be able to get a very good deal. Your interest rate and fees will be higher. This makes sense, because lenders see you as a higher risk and they want to do all they can to get their money back. However, this doesn’t mean that you can’t get a good deal if you know where to look.
No Credit Check Installment Loans
These types of loans, while rare, do exist. No matter what your past financial history is, you will be able to get a loan so long as you are employed. There are no rules on what you can spend the money on, so whether you have an unexpected bill or want to splurge on a designer bag, you are welcome to do so.
The most affordable types of no credit check installment loans are secured loans. Usually, these loans are not of incredibly high amounts, and they can be secured against things such as your vehicle’s title (title loan), your salary (payday loan), or any personal belongings (pawn loan). There are some unsecured loans as well, like the doorstep collection loan, and these tend to have higher interest rates.
Applying for Loans
You can apply for these types of loans online and offline. However, the offline options are becoming increasingly difficult to find due to federal regulations. Online applications tend to be far more convenient anyway, as you don’t even have to leave the comfort of your couch. All details can be filled in and checked through a form on the lender’s website, and they will then transfer the money into your account straight away, sometimes within a few hours.
It will come as no surprise that these types of loans are incredibly popular. While they do sound like the perfect solution, you have to be aware of the drawbacks as well. Some of the drawbacks include:
- These loans tend to not be available in very high amounts.
- The interest rates are much higher than what they are with prime lenders.
- If you have repayment difficulties, very few options are available to you.
- It is quite easy to get trapped in a cycle of debt, as lenders often enable you to roll the loan over, paying only the interest.
As with any financial product, it is important that you focus on affordability. Sometimes, a loan is the only way to meet an emergency situation. However, if there is any way you can obtain the same amount of money through other ways, including saving up, it is always better.
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