Credit Loans

High-Interest Loans for Bad Credit

It doesn’t seem fair that the people with low credit scores, who may be struggling the most financially, are the same ones enduring high interest rates. Unfortunately, there are many lenders out there hoping to take advantage of borrowers with poor credit. If you’re currently shopping for an online personal loan, here’s what you should know before applying for a loan.

Bad Credit Loans

Having low credit, and especially very bad credit makes finding an affordable loan difficult. Shopping for a personal loan can be an overwhelming process on its own. And having bad credit can make it even more stressful. 

While there may be a plethora of lenders willing to offer you a loan, your goal will be to choose the right one for your situation. Personal lenders offering loans for individuals with low credit scores can sometimes be aiming to take advantage of their customers. These lenders may offer very high interest rates and short repayment terms and loan periods. 

These types of terms can lead borrowers into a cycle of debt. If a customer can’t repay a high-interest loan within the repayment period, they may need to roll over the loan. This means extending the loan term for additional fees. And many borrowers who roll over their loans will likely have to do it again, which may trap them in a constant cycle of rollovers and fees. 

Most Common Personal Loan Types

The following loans are common ones you may have considered if you need a loan with bad credit. Learn more about them, how they work, and what to watch out for: 

Payday Loans

A payday loan is a short-term loan that offers borrowers small amounts of cash to help them last to their next payday. The repayment period is usually only two weeks. These loans are unsecured, meaning you won’t need to offer any collateral to get one. Additionally, payday loans online tend to carry high-interest rates depending on the lender, and the state you live in. 

If you’re considering a payday loan, make sure you’ll have the funds necessary to repay it on time. The key here is to avoid rolling the loan over into a new term. 

3-Month Payday Loans

A three-month payday loan at its core is the same as a regular one, with one main difference: your repayment term lasts three months instead of two weeks. The interest rates still tend to be high for these loans as well. The only advantage to choosing a three-month payday loan over a traditional one would be that you’ll have more time to gather the funds you need to repay the loan. 

Title Loans

A title loan is a secured, high-interest loan that allows borrowers to get a larger amount of cash based on the value of their vehicle. Because these loans are secured, they will require collateral. In this case, the collateral will be the title to your vehicle. 

The lender will assess your vehicle and offer you a loan based on a fraction of the value of the vehicle. You then offer your title to the lender, and if you repay the loan on time you’ll get it back. If you can’t repay the loan, the lender will seize your vehicle and sell it to recoup their loss. 

Pawn Shop Loans

A pawn shop loan is also a secured loan. In this case, you can offer a pawn shop lender anything of value that they may be interested in. Items people offer include electronics, jewelry, and other valuables. Much like with title loans, they will evaluate the item and offer you cash based on the perceived value. 

These loans work like many other secured loans. If you aren’t able to repay the loan by the due date, the lender will keep it and sell it. 

What Are Guaranteed Approval Online Loans?

During your research of online personal loans, you may come across the term “guaranteed approval.” This is a term used by many online lenders, to lure new customers into applying for their loans. But what does it really mean? And should you consider a lender who’s offering guaranteed approval loans?

Guaranteed approval basically means what it sounds like: the lender is guaranteeing that if you apply for their loan, you will be approved and get cash. 

If your initial reaction to this is skepticism, then you have good instincts. It’s unlikely that a lender can guarantee you’ll be approved since they won’t know your current situation until you apply. Any lender that offers a guaranteed-approval loan probably isn’t one you want to deal with. 

Credible lenders always review your information before deciding if their loans are right for you. At CreditNinja, we want to make sure that our loans are right for you. Ultimately, this protects our borrowers by helping them to avoid getting in over their heads. Learn more about CreditNinja’s personal loans, and personal finance best practices in the CreditNinja Dojo!

There are two types of loans offered by direct lenders that don’t require hard checks: payday loans and personal loans.

Payday Loans

Payday loan is a popular short-term borrowing option. These types of loans can be approved within minutes, and are meant for unplanned, urgent situations. 

Payday loans are repaid from your paycheck. They often come with a two-week term. Payday loans usually have high interest rates because of the short-term nature of the loans. Depending on your current financial situation, payday loans can be a practical choice.

The key thing to remember with payday loans is to work out a repayment schedule you can stick to, as late payments could mean additional costs so be sure to take control of payday loans before they get out of hand.

Personal Installment Loans

Personal installment loans come with longer terms, lower interest rates, and are typically considered a safer and more affordable option than payday loans. 

The total amount borrowed, along with interest and other fees, are paid back over a series of payments. That way, you don’t have to repay everything at once, and lower monthly payments are much easier to manage without stretching your budget. Use our personal loan calculator to help with your budgeting.