February 2, 2012

As the country continues to deal with the after effects of financial woes that have been aptly compared to The Great Depression, prospective borrowers must now contend with stricter regulations to qualify for bank loans. These regulations make it exceedingly difficult for anyone with less than perfect credit to obtain a personal loan.

When the economy was booming plenty of people had good credit with extra money to spare. As a result of the downturn in the economy and a slow recovery period, there’s suddenly a surprising number of Americans who are dealing with the realities of having bad credit.

One of the starkest realities is that most traditional lenders will not accept borrowers with bad credit. It’s worth noting that bad credit isn’t always a case of people not wanting to pay their bills. When money is tight all it takes is one unexpected bill to throw the entire budget out of whack. If your credit is bad and you’re experiencing a temporary cash shortfall and it’s causing you undue financial stress, bad credit loans may offer a solution. You can apply for bad credit loans online and the majority of lenders provide instant approval in 30 minutes or less.

Obtaining bad credit loans

First you must accept the facts; the facts are that qualifying for a bad credit loan means that you will more than likely be subjected to higher fees. And usually you will be charged a higher rate of interest. Don’t despair; there are numerous lenders who are willing to help you obtain a loan. Invest time in learning as much as you can about the lenders to find the best possible loan, preferably one which offers reasonable fees and rates based on your specific financial situation.

Understanding the two types of bad credit loans

Secured-The fastest way to get approved for a bad credit loan when you need a large amount of money is to apply for a loan using collateral as repayment assurance. A secured loan means that you can use your assets to borrow up to 125% of the property’s value. Just keep in mind that in the event of default, the property is transferred to the lender who can then sell the property to collect the unpaid debt.

Unsecured-Unsecured loans do not require collateral; the only thing that’s required is a signature. In order to get your bad credit unsecured loan approved, you must meet the following criteria:

1. Have a stable employment record
2. Be able to present positive proof of identity
3. Prospective borrowers must be 18 years or older
4. Demonstrate the ability to make timely payments
5. Be able to establish 3 months or more at the same address
6. Present a valid checking account and not a debit card account for loan repayment allocation
7. Provide proof of income, income requirements may vary according to lenders but generally you will need to make at least $1000 a month

Bad credit loans can actually help you to repair your credit and improve your credit score. There are two key factors to increasing your credit score, the first one is to avoid late or missed payments and the second factor is the length of time that it takes for you to repay your short term personal loan.

Things to consider with a bad credit lender:

• Seek flexible repayment terms
• Browse multiple lenders to compare offers
• Understand the requirements and rules before applying
• Select a lenders who reports payment histories to all 3 major credit bureaus
• Review the fine print to avoid hidden conditions and early repayment penalties
• Some lenders have shorter repayment periods for bad credit borrowers, know your risks, if you fall into the category of being at risk for default, look for lenders with longer repayment terms

The most common types of bad credit loans are payday and title loans. Payday loans offer the shortest loan terms and usually there’s easy qualifying for anyone who is employed with a proven source of income. Title loans are a good example of a secured loan, your car is the collateral that’s used to borrow money. Payday loans are based on your weekly or monthly take home pay after taxes and with title loans the amount that you can borrow depends on the value of your car.

Questions to help you decide if you’re a good candidate for a personal loan:

1. Have you been turned down for a loan with a traditional lender?
2. Due to your bad credit, are you considered a high risk borrower?
3. Are you having temporary financial difficulties and need money fast?
4. Can you afford the monthly loan payments with the calculated interest rates and fees?
5. Do you have more than one issue that has caused past credit problems such as repossessions, foreclosure, slow payment history or liens?


It’s important to conduct an honest assessment before applying for a personal loan, to avoid the possibility of default, which would make it nearly impossible to borrow funds in the future. If you already have slightly bruised credit with only a few minor credit infractions, obtaining a quick loan could help you get your finances back on track. Major credit problems will require a much longer time to repair and it will be awhile before you see an improvement in your credit score.

The important thing is to learn as much as you can about the industry prior to applying for a loan. This can help you to avoid scams and assist you in determining if you can afford to make the minimum monthly payment.

Educate yourself about the terms and conditions of repayment, and then select the lender which offers you the best loan package. As a high risk or subprime borrower, the only way to avoid making the same money mistakes repeatedly is to execute better financial decisions.

Credit problems don’t have to prevent you from obtaining a personal loan. Most lenders offer guaranteed approval with no credit checks when other eligibility requirements are met.