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If you have bad credit, then you may think that a loan is out of your reach. However, it is possible to get a loan without having a good credit score. There are many lending options that you have.
Home Equity Line of Credit
If you are a homeowner and your home has built-in equity, then you can get a home equity line of credit. This is a risky type of loan because you are using your home as collateral. However, it is one of the best options if you have bad credit.
You will be able to use your funds in whatever way that you want. A home equity line of credit typically has a lower interest rate than credit cards.
Secured Loans
Lenders feel more comfortable lending to people with bad credit if they have something that they can use as collateral. The item that you use as collateral can be repossessed if you do not pay the loan back. There are several things that you can use as collateral.
You can use your vehicle as collateral. A loan that is secured by a car is also known as a vehicle title loan. You can also use investments that you have as collateral. Additionally, some lenders will allow you to use your future paychecks as collateral.
Payday Loans
Payday loans are a popular option for people who have bad credit. It is relatively simple to get a payday loan. If you have proof of income and a bank account, then you will likely be able to get approved for a payday loan. However, there are downsides that come along with getting a payday loan.
Payday loans typically have high interest rates. Even though no credit check is required, your credit score will be affected if you do not pay back the loan.
Unsecured Loan
Contrary to popular belief, it is still possible for you to get an unsecured loan with bad credit. However, your lender will likely require that you apply with a co-signer. The co-signer must have good credit and stable employment history. If you cannot pay back the loan, then the co-signer will be responsible.
You and your cosigner’s credit will take a hit if the loan is not paid back. However, there are benefits that you can reap from applying with a co-signer. You may be able to get a loan with a lower interest rate. A cosigner also allows you to get a loan without having to risk your possessions by using them as collateral.
Credit Union Loans
If you have trouble getting a loan from a bank, then you should consider going to a credit union. It is easier to get approved for a credit union loan because the standards are more relaxed. They also offer loans for a lower interest rate because they work on a non-profit basis. Additionally, there are fewer fees and penalties.
Keep in mind that your credit score will still determine how much you will be able to borrow.
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