Bad credit personal loans should only be taken out if really necessary. Generally speaking the lower your credit scores the higher the interest rate you will be charged on your loan. You may have to put up additional security. For example a bank or finance house may not offer you a personal loan but would be willing to do a home equity loan instead.
Don’t rush into more borrowing if bad credit personal loans are the only option!
Before you rush into borrowing more money when you already have credit problems, you need to figure out if you really need this cash. What is the money going to be used for? To lots of people with bad credit, personal loans may seem like a good option to try to get out of debt. The logic is that it would be easier and often cheaper to make one payment every month than to try to manage all your different credit payments. Instead it may be better claiming bankruptcy.
Admit it when you are in over your head
Too many people spend time and money spinning their wheels, making their financial situation worse rather than admitting they are in over their head. Often filing for bankruptcy is the only viable solution and the sooner they face this the better. Don’t get me wrong. I am not advocating bankruptcy as an option for everyone who has credit card debts. But for those who have way too many debts and will never repay the money based on their current circumstances it may be the best way forward.
Loans for people with bad credit shouldn’t be used to buy more stuff!
If you are looking for loans for people with bad credit to fund more purchases of stuff you need to think again. Do you really need the item you so desperately want? If so why not save up and buy it when you have the cash. You would be amazed how saving for a specific item often shows you didn’t really want it because by the time you have the money together you may have gone off the idea of buying it. Impulse purchases are the reason why many Americans are drowning in a sea of debt.
If you are adamant you want that particular item can you not buy it second hand instead? Do you have to have the latest version especially when it is obvious you cannot afford it? Can you sell any of your other stuff to fund the purchase? People with bad credit shouldn’t take out loans for anything other than a real necessity. This would include buying a second hand car for work but not buying the latest model sports car to impress their friends.
Finding the money to repay bad credit personal loans is the hard part
Even if you manage to qualify for bad credit personal loans that is the easy part. The hard part will be finding the money every month to make your repayments. You should really concentrate on improving your credit score now and then you will qualify for better loan deals. Never opt for a secured personal loan as if you fail to make the payments you could lose your home. It simply isn’t worth the risk.
Avoid debt consolidation and payday loans
Although when you have bad credit, secured loans may seem like the only option available. This is yet another reason to work on improving your existing credit score. You may qualify for a loan from your existing bank. If they can see you have the ability to repay the debt they may lend you the cash but they are going to charge you a high interest rate for the additional risk involved. Some people with overwhelming credit card debts will take out a debt consolidation loan. These are often recommended by credit counselors and in some cases they may be a good idea. But for the majority of clients they are the worst invention ever. They will end up in even more debt but now part of their debt will be secured which gives more powers to their creditors. Avoid all the sales pitches for these loans and treat them as very much a last resort. The credit adviser may tell you that it will be fantastic having one low monthly payment instead of five or six but the reality is that they wont tell you that you will be paying back the loan for years. If you look at the quote which should give you the total amount you will have to pay back you will be shocked. Debt consolidation and payday loans should be avoided at all costs.
Get expert advice
The only way you are going to sort out your financial situation is with the help of an expert. Book an appointment with your local bankruptcy attorney and see what he advises. He may suggest hat you go into Chapter 7 and while this may not be what you want to hear, it may be the best solution for your situation. Sometimes we end up in so much debt; we will never be free even if we live past the age of 100. You do not want to be paying huge debts when you are trying to survive on your pension. And don’t for a second think about using your 401k to repay credit card debt unless your bankruptcy attorney advises you to do so.
Hopefully you will stop looking for loans for bad credit personal loans and see what proactive steps you can take to sort out your financial situation. When you have a good credit score, you can then look at taking out a loan but you may just find that you are not interested.