If you have bad credit, you are probably well aware that the options that you have for obtaining a loan or finding a lending institution willing to look at your application with any bit of seriousness is an extremely difficult task. There are ways to get a loan with bad credit, however, to buy the things you need now.
Two Loan Types For Bad Credit Loans
There are two types of bad credit loans that are most often written. The first of these is the secured one. It is written for those with bad credit who have security that they can offer up to the lender to stand good for the amount of money that they wish to borrow. Security, or collateral, can be your home or late model automobile. The lender will place a lien against your home or automobile until you have repaid them in full for the amount of money that they extend to you.
Your other option is an unsecured bad credit loan. It is written for bad credit borrowers who either have no collateral to pledge against the amount borrowed, or do not wish to put their home or automobile up as security.
The main difference in these two types is the amount of money it cost you over the term. A secured bad credit loan is a less risky version than an unsecured one and therefore will carry a lower interest rate - up to ten percent less in most cases. The secured version also has an advantage over the unsecured in that it can be written for a longer term, which will make your monthly payments smaller and easier to manage according to your current budget. Additionally, you can usually receive higher amounts with a secured bad credit loan.
Cosigner Can Lower Interest
You can get a lower interest rate on your unsecured bad credit loan by applying with a creditworthy cosigner. A creditworthy cosigner is a person who agrees to make the payments if, for any reason, you fail to honor the terms of your lending agreement. Keep in mind that some lenders offer to release your cosigner from liability once you have established a positive payment track record with you. This option makes cosigning alongside you a more appealing to potential cosigners.
Online Lenders Love New Borrowers
You can find additional savings on your bad credit loan by visiting online lenders to do some shopping comparison. Many lenders face so much competition online that they have greatly reduced the amount of interest that they charge on loans written to new borrowers, and provide the added convenience of a paperless application that can be completed from the comfort of your home.
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