Obtaining loans without any collateral is often not possible when “bad credit” is part of the equation. This is most especially true with traditional lending institutions such as banks, which usually require a good credit rating. However, the good news is that there are actually ways of getting the funds you need. For example, you can apply for bad credit loans online and get emergency funds in as fast as 24 hours.
What Are Online Bad Credit Loans?
Bad credit loans are unsecured loans designed for people with bad rating or no payment history at all. There is no credit check required, which makes the approval process even faster. Although there are some traditional lending institutions that offer bad credit loans, chances are that they require collateral, which can be in the form of properties. If you need a small amount of money, however, for temporary financial problems, the best option to choose is to secure bad credit loans via online lenders.
Terms and Types
Being unsecured type, expect a higher interest rate for bad credit loans. Just because lenders require no collateral, they impose higher interest rate for the risks that comes with them. This is why it is best to know what is inside the terms and conditions of the loan you intend to take out.
Also keep in mind that most bad credit loans have a short repayment term, usually between days to a few months. They come in forms called payday advances, cash advances and installment loans. Payday advances, as the term suggests, are usually paid back on the borrower’s next payday or within weeks to a month or two. There are, however, some online lenders that allow a repayment period of up to four paydays. Meanwhile, cash advances also work like payday advances. In fact, the terms are usually interchanged. Cash advances are designed for financial emergencies in between paydays — it can be days or a week before the next payday. Most cash advances, however, are paid back in days to a week or two.
If you are looking for bad credit loans with smaller monthly payment and longer repayment term, another option for you are the installment loans. As the name suggests, they are paid back in an installment basis over a certain period of time, with smaller monthly payments.
When to Obtain Bad Credit Loans?
Although loans in general were created for those who are in need of funds, keep in mind that each type of loan is designed for certain financial problems. For instance, car loans are designed for purchase of vehicles. In the same way, online bad credit loans, such as payday and cash advances, are designed for small, short-term or temporary financial needs. For instance, you need some money for an unexpected expenditure such as car or dental fix. When you have such a temporary financial problem which cannot wait long, the best option for you would be to obtain online bad credit loans. This is of course, next to borrowing money from relatives or friends, an option which may not come with an interest or paperwork.
Bad credit loans, although they usually come with higher-than-usual interest rates, should not be compared to regular bank loans. This is because the nature of this type of loan is different from that of regular traditional ones. Bad credit loans are quick cash, that can be obtained in as fast as 24 hours. Bad credit loans also usually offer small amounts and the payment term is usually short. Overall, online bad credit loans are great sources of funds, only if used for the right purpose.