Loans for people with bad credit

Most people think it is impossible to get a loan with poor credit. After all, people with poor credit have a history of not paying back loans in a timely manner, or not paying them back at all. This makes a bad risk for creditors.

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  • Most people think it is impossible to get a loan with poor credit. After all, people with poor credit have a history of not paying back loans in a timely manner, or not paying them back at all. This makes a bad risk for creditors.

  • The truth is, people with bad credit can get loans. They may not be able to secure a loan on their own, or get the best rates, but there are options available to them.

  • CO-SIGNERS

  • The first way those with poor credit can get a loan is by having a co-signer. A co-signer is a person with a clean credit history who secures the loan with the person with poor credit. In essence, the co-signer takes the responsibility to make sure the person with poor credit makes payments on the loan. If payments aren't made, the co-signer has agreed to pay back the loan, instead.

  • Because of this, getting a co-signer is tricky business. Many people won't co-sign on a loan because they do not want to be held responsible for someone else's debt. In most cases, a co-signer is a parent or a loved one, and relationships are often damaged if the loan is not paid on time and the co-signer is left to clean up the mess. If you ask someone to co-sign on a loan, you must be certain that you can make your payments, or you may risk more than your credit.

  • HIGH-INTEREST LOANS

  • If a co-signer isn't an option, those with poor credit may still be able to secure a loan on their own. Some lending institutions will give loans to those with poor credit, but the interest rate will be much higher than what is offered to those with good credit. Expect to pay as much as 8% to 10% higher interest, which means higher payments or a longer term, or both.

  • SECURED LOANS

  • A third option is a secured loan. In this case, the person must use property as collateral against the loan. To get a secured loan, you must own something that can be put up as collateral. The most common type of property is a vehicle that is owned outright. The reason for this collateral is if payments are not made the property can be repossessed. This means you could have your property taken from you as payment if you aren't able to pay back the loan.

  • With these options, those with poor credit can get loans and rebuild their credit. This puts them on the road toward financial stability with a good credit profile. This is good news for those who are currently wondering if they'll ever be able to get out of credit prison.

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Gordon Putnam is a credit repair expert with Utah Credit Alliance. Utah Credit Alliance specializes in credit repair and boosting credit scores.

 

Website: http://www.utahcreditalliance.com

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