Contrary to popular belief, it is possible to get bad credit secured loans. However, this doesn’t mean that this is a very wise idea by any stretch of the imagination. If you need a loan, but don’t have anything that you can secure it with, you may need to get an unsecured loan with your bad credit. All is not lost, though. With this guide, you will know what to do to get the best loan you can.
* You can expect to get a much higher rate on your loan if it’s unsecured. Bad credit unsecured loans are very costly in this sense, so it’s best to shop around as much as possible. Look at 10 different offers (at least!) before you choose.
Do not, under any circumstance, let someone talk you into borrowing more money than you can afford, or let them talk you into paying it over a longer period of time. You don’t want to have to spend any more money than you would need to in order to cover the cost of a bad credit unsecured loan!
Part of getting a great rate is fighting for it – show the credit bureau that you want to get good credit. Pay off the smaller defaults you may have, and try to negotiate with different credit card companies that you may have forgotten to pay. You’ll be surprised at how sharply your credit score can rise with a couple of quick FICO-boosting tricks.
Many of the companies that offer bad credit unsecured loans assume that people with bad credit are financially illiterate. Prove them wrong by doing your homework about the company, the loan rates, and your credit score ahead of time.
Remember, getting an unsecured loan while you have a bad credit score is a very, very expensive and risky action. You should only take a loan like this if you really need it. Once you decide that bad credit unsecured loans are your only option, you will have to do all you can to get a low rate.
The Alternatives To Bad Credit Unsecured Loans
Many people assume that bad credit unsecured loans are their only option, and they are very wrong! There are loans available to people with low or bad credit that can give you better rates, but you will have to offer something in exchange. Since getting an unsecured loan should be a last resort, we rounded up some of the better choices that you can make.
* While bad credit unsecured loans allow you to avoid getting a guarantor or a house involved, chances are that you forgot about title loans. If you know you will have the money soon, you can offer your car title as collateral until the loan is paid off. It’s a secured, short-term loan that is great for small amounts of quick cash.
If you don’t have a home or a car which you can offer, you might be able to ask for the help of a close friend or relative by getting them to be a guarantor. Guarantor loans are reliable, lower rate loan that are secured by having two payers instead of one. Don’t get anyone involved if you aren’t sure you can pay the loan – friendships can be ruined that way.
A P2P loan, though technically unsecured, is still a better option than many of the unsecured loans offered by banks because you can negotiate rates with a real person instead of a corporation. The downside to these loans is that there is usually a $6,000 maximum.
Some people might suggest that borrowing out of your Roth IRA or your 401K may be a good option. If you are in a dire position, this might not be a bad idea for very large amounts. Make sure the taxes and loss are worth it!
Although this is not normally possible, if there is any chance that you can save up the money or pool money together with a friend for this purpose, you should try to work towards that goal instead of taking a bad credit unsecured loan. Believe us, it’ll be cheaper!
Basically, getting an unsecured loan should be a last resort. Brainstorm solutions that won’t hurt your bank account as much as an unsecured loan. After all, you shouldn’t have to pay such a high price for the mistakes of your past, and that’s just what a bad credit unsecured loan will make you do.