The recession in 2008 affected millions all over the world when more than 33% of respective individuals ended up with credit scores that reached rock bottom. At that time, bankruptcy was all over the place. The credit industry got stretched so tightly that a business transaction or even just a simple dream trip to Europe, with a bad credit score, is practically impossible. Today, this is not the case anymore.
Since the birth of bad credit loans came to be, the US economy had started surviving. Now, if you lack capital for the business you wish to establish, or been wanting to go for a Caribbean trip after college but with almost no budget, you can throw your hesitations away. There’s now a way to make your dreams come true. Because now, applying for a loan, contrary to popular belief, is just a few easy steps away.
Bad Credit Consequence
A bad credit loan is for those people who come with histories of poor credit. Basically, bad credit loans are just the same as regular loans. In simple terms, its only difference is that it comes with a much higher interest rate. If you come with a bad credit score, applying for a loan can still be possible but extra time consuming.
Knowing Bad Credit Loans
Meet the secured loan and the unsecured loan – the two life savers of people with bad credit scores.
A secured loan can be applied for through a collateral. The interest rate is low and is often negotiable. If you have a better credit rating, then you will be provided with options.
When it comes to unsecured loans the interest rate is higher since there’s no collateral and the loan that can be approved will depend on your credit history.
More Loaning Options
There are several options that banks or loaning companies can offer. One is by line of credit, where the bank will give you a maximum allowable balance. An interest will be added to your every purchase. Payment is on a monthly basis. It can be linked to a checking account or a debit account and could serve as a secure or unsecured loan.
The conventional loan, on the other hand, can either be a personal loan, car loan, cash loan or home equity loan. It comes with pre-determined payment terms. With mortgages, the payment term may take a longer period. It can take about 25 to 30 years. Rates can be fixed or varied.