Do you need cash? Here are some solutions for those with bad credit
Those looking for a personal loan for credit problems have a few options to explore. Three of the most popular are credit cards, home equity loans, and personal loans for people with bad credit. The money earned can be used for many reasons to include buying jewelry or improving a business. Which type is best will depend on your intentions for use and your personal financial status.
Here’s a little about each type to help anyone make an informed decision when deciding to pursue a bad credit personal loan.
Personal loans
One can get a personal loan from most banks. As stated above, they can be used for just about anything and are based on the ability to provide proof of income and assets. Those assets have to be worth the amount the person is borrowing. It is a quick process for the application when these things are present and accounted for and the applicant will find out in a few days at most if they are approved.
The main disadvantage is that interest rates are usually high, around an average of 12%. The time limit for reimbursement varies, but generally does not exceed two years. Because of this, financing very large amounts this way is not recommended, as many have trouble paying them off in two years.
Credit cards
Credit cards are another option when consumers are looking for a type of personal loan for credit problems. They are the same as securing a loan, since they are also repaid later. Cards are easy to use because they are widely accepted to pay for almost anything.
They are easy to apply for and can cost upwards of $10,000. The application is reviewed quickly, usually no more than two weeks. There are also those that are reviewed by phone and approved in just minutes. It all depends on the card company. Terms vary widely, so it’s important that whoever is applying really checks all of the fine print.
Within this print, there will be many things to take note of. At the top of the list are the interest rate, annual fees, excess fees, and more. Credit cards have been proven to accumulate debt faster than other types of loans because they are so widely available and easy to use at any retailer. For someone looking for a bad credit personal loan, this can be an unwise decision and end up damaging credit without repairing it.
Home Equity Line
The home equity line of credit is a smart move. It allows homeowners the ability to borrow against the value of their home. It is easy to calculate how much someone can get. All they have to do is take the market value of the house against what is still owed. Many choose not to do this if they plan to sell in the near future. However, if you plan to stay there for a long time, it’s a great option.
Like other personal loans for bad credit, the money can be used for whatever they please. They are often used for home improvements, debt consolidation, and much more. Interest rates are low to average and can be paid over up to 20 years in some circumstances. There aren’t many downsides to a credit home equity loan; In some cases the interest is a tax deduction. That’s hard to beat!
The main drawback of this type of personal loan for bad credit is that the person who takes it can sometimes be left in a worse situation with respect to their mortgage. If there are two sources of income and they are well above the bills that are paid each month, it is likely that the person can easily pay off the loan. Otherwise, it may not be of any benefit. Especially from the consumer who ends up losing a job or is suddenly unable to work. Also, rates sometimes fluctuate.
