If your credit score is poor but you are in desperate need of a loan to deal with a financial emergency like a sudden car repair or an urgent medical bill, borrowing from a bank or credit union can often prove unsuccessful.
After all, most traditional lenders tend to consider anyone with bad credit a financial hazard, so they would rarely approve a personal loan request. Luckily, you can get bad credit $5000 personal loans online via lending services like CocoLoan.
These types of loans are specifically designed to cater to borrowers with a bad credit history, which is why they tend to come with very lax eligibility requirements. However, while these loans are easily accessible, it is important to keep in mind that the lower your credit score, the higher the interest rate offered will be.
These loans can also either be secured, which means that you will need to put up collateral, or unsecured, which means that no collateral is required. Most secured bad credit loans tend to come with lower interest rates since there is less risk to the lender. However, the downside is that if you default, the lender will be able to sell your asset, eg. a car, to recoup their money.
What Types of Loans Can You Get With Bad Credit?
There are a wide variety of bad credit loans that you can apply for via lending sites like CocoLoan, which means that you can easily find a line of credit that is best suited to your budget and financial needs. In this respect, some of the most common types of loans that you can get with bad credit include;
Personal loans for bad credit
A personal loan for bad credit works in the same way that a loan from a bank or credit union works, with the main difference being that a poor credit rating will not affect your chances of approval. You can get personal loans from CocoLoan for up to $35,000 before being required to repay the loan over a set period of time in monthly installments.
These loans are also unsecured, so you don’t usually need to put up any collateral to apply for one. However, keep in mind that these loans tend to be dependent on your credit score, so while you will still be able to get approved, the lower your score is, the higher your interest rate will be.
Payday loans are effectively short-term loans that are meant to act as small cash advances to keep you covered until your next paycheck arrives. As a result, they typically range between $100 and $1000, with most of these loans being processed within the same day of approval.
They are also usually due within 2-4 weeks, with the entire amount plus interest meant to be paid in full. It also doesn’t take much to qualify for funding, but the problem is that they also come with extremely high APRs that can go as high as 400%.
Quick loans are ideal for borrowers that need a quick cash injection to deal with an unexpected financial emergency. They are typically processed as soon as the next business day, and they allow you to access relatively higher loan amounts than payday loans.
They are also accessible with a bad credit score, but you should know that they tend to come with high-interest rates and shorter repayment periods compared to personal loans.
Title loans are a secured form of lending that requires you to put up your car as collateral to secure funding. As a result, you can often access higher loan amounts and lower interest rates due to the lower level of risk to the lender.
However, the downside is that if you fail to repay your loan on time, the lender will be able to repossess the car. And if you need it for work or business, this can end up complicating your financial situation even further.
Things To Consider Before Applying For A Bad Credit Loan
If you want to secure yourself the best possible deal, there are a few main factors that you need to take into consideration before you apply for a bad credit loan.
Loan amount borrowed – Some bad credit lenders may be willing to offer you a lower interest rate if you borrow a larger amount, but you need to be confident in your ability to repay your loan on time. After all, the more you borrow, the more money you will need to pay back over time, so keep that in mind.
Loan repayment term – When it comes to the loan’s repayment term, you should keep in mind that borrowing over a longer period of time will normally allow you to lower your monthly repayments. However, the problem with having a longer repayment term is that the overall cost of the loan will be higher, so choose wisely.
Loan interest rate – As a bad credit borrower, getting a low-interest rate can often be very difficult, but there are lenders out there that are willing to offer competitive rates, especially since there is so much competition in the online lending market. You can often use platforms like CocoLoan to compare loan offers from multiple lenders until you find the right one.
How To Secure a Loan With Bad Credit?
If you are looking to get approved for funding with bad credit, it is often recommended that you use an online lending service like CocoLoan. The credit broker has a simple loan allocation process, and since they have over 100 lenders in their network, this means that you are very likely to get a competitive loan offer.
Step 1: The first step is to head to the site and fill out the online pre-approval form. You will need to select the desired loan amount and also fill in some key details about yourself and your finances.
This can include your name, address, social security number, bank account number, credit score, etc. Once you’re done, you simply submit it and wait for a decision.
Step 2: You can often expect to receive a decision on your loan request within minutes, and if approved, you will be presented with multiple loan offers from different lenders. Each offer will have its own rates and terms, so take the time to review them carefully until you are satisfied that you have found the right one.
Step 3: Once you select a loan offer, you only need to review the loan agreement in detail and e-sign it. The lender will then start to process your funds, which you can typically expect to receive in your checking account by the next business day. However, this can sometimes vary depending on the lender and your bank’s processing times.
What Happens If You Fail to Make Your Repayments?
Before you decide to take on a bad credit loan, it is important that you conduct a review of your expected income and assess your financial situation to make sure that you can afford to make the monthly repayments on time.
Otherwise, failure to do so can put you at risk of falling into a bad debt cycle that further complicates your financial situation. After all, some lenders tend to charge late payment fees, so if you don’t make your repayments on time, the cost of your loan could rise dramatically.
Furthermore, while payday lenders do not report on-time payments, late payments may be reported to the relevant credit bureaus. If this happens, you may damage your credit score even further, which can severely jeopardize your chances of securing a loan in the future.
It is for this reason that you should always set up autopay, which will ensure that the money you owe will be automatically deducted from your account each month without fail. And if you realize that you may not be able to make a payment on time, you should contact the lender as soon as possible.
Some of them may be open to providing you with a grace period or even adjusting your payment schedule so that you can manage your debt better.