A bad credit loan is any loan that is designed for borrowers with low credit scores or poor borrowing histories. Many traditional bank or credit union loans are reserved for people with good credit scores. Fortunately, there are several types of loans that exist to help borrowers who struggle with poor credit.
Having a good credit score allows you to get better and more affordable loans, credit cards, and other financial products. If you have low credit, you may not be offered the same types of loans or favorable credit options. This can make it difficult to improve your credit.
But there are a few types of loans that are almost exclusively used by borrowers with poor credit. And while you may not get the best terms and conditions, you can still get the money you need in a hurry.
Personal Installment Loans: This is commonly referred to as a good alternative to some of the other quick cash options for borrowers with low credit scores. These loans allow borrowers to get several hundred dollars, up to a couple thousand in some cases. You also have a longer amount of time to repay the loan compared to payday and title loans. Plus, these loans are unsecured so you can still get one without any collateral.
Payday Loans: These are very short-term, small-dollar loans that should be reserved for emergency situations. They are unsecured loans, and they only offer borrowers a small amount of cash (usually a few hundred dollars on average). The problem with payday loans is that they can be difficult to repay on time because the repayment period is usually only about two weeks.
Title Loans: These are secured loans, meaning you will have to provide collateral to be considered for one. The collateral you’ll need to offer up would be the title to your vehicle. The lender then offers you a loan based on the value of the vehicle. If you repay the loan on time, you get your title back. But if you can’t repay the loan, the lender can seize your vehicle and sell it to recover their loss.