People with Bad Credit: How to get Personal Loans Guaranteed Approval
When you have bad credit it can make it nearly impossible to find lenders willing to loan you money. However, don’t get too discouraged because it can be done. There are lenders who understand people will go through tough times at one point in life or another. Let’s face it – there are very few Australians who don’t struggle from time to time in their lives. If you are down on your luck and trying to obtain a personal loan with bad credit, we have compiled the following information to help you find guaranteed approval.
No Credit Check Loans
Those lenders willing to offer no credit check loans have other stringent criteria they base decisions on. The main thing they are concerned with is your current financial situation; they want to know you can repay the loan. So, rather than performing credit checks, they base their decision on your outstanding credit accounts, income amount, frequency of income, and if the income is regular or not.
It is considered a high risk practice to loan to people with bad credit. For this reason they will be very careful to ensure you get paid frequently enough and sums that are large enough for you to comfortably pay the payment each month. Moreover, some of them may require direct auto debit to be in place, to further ensure they’ll get paid. Any reputable lender will not approve loans for more than a borrower can pay.
The good thing about this kind of loan is that it does not require a credit check, and as long as you have steady income you should have no problem borrowing. On the other hand, such loans can be a bit more expensive with higher interest rates and other fees. So, it’s important to think hard before borrowing such loans, make sure that it’s one of your last resort options.
In Australia if you have bad credit the best method for obtaining a loan of $5,000 or less is by seeking a secured personal loan. These loans are great for those with low credit scores because you simply trade collateral of an equal value for the loan. So, for example if your car is worth $5,000 and you own it with no outstanding debt you can place it for collateral in exchange for a cash loan of $5,000. It’s also common for people to use property, jewelry, artwork, and the like.
Yet these loans are not risk-free. In the event that you stop paying and your loan becomes delinquent the lender will confiscate the item you placed up for collateral. So, if you place your car against the loan and default on payments, you will lose all rights to that car. In other words, if you don’t have a security you are willing to lose, don’t place it as collateral on a secured loan.
Another option you have is to find a co-signer to secure the loan for you. Lenders tend to like offering loans to borrowers with a co-signer because it gives them added protection the loan will be repaid. The way it works is you are agreeing to make the scheduled loan payments, but in the event that you cannot make the payment the co-signer is agreeing to pay it.
One thing that makes Australia unique in terms of obtaining personal loans is that they have many non-profit organizations that help members of the community when they are in need. Organizations such as the Good Shepherd Youth and Family Service have operated in the country for the past 150 years. It is a great place for offering loans with little or no interest to people who are low income. Though the loans are very small they can go up to $5,000 sometimes, and this is a great amount if you need a computer, car, or other domestic expense. The best part is they allow you a couple years to repay the loan and the low interest rate is locked, so it will never balloon. Since these loans are limited the organizations tend to restrict the loan uses, but if your needs fall into their guidelines this is your best option.
Payday or Subprime Loans
A payday loan or a subprime loan is great if you don’t have any collateral for a secured loan and don’t meet the requirements for a community program loan. The other good thing about these loan types is they don’t require a long approval process, with many of them offering same-day approval. Yet, don’t confuse the two terms, as a payday loan and a subprime loan are two different things.
Subprime lenders are willing to work with Australians with less-than-perfect credit scores who are interested in short or long-term loans. On the other hand, a payday lender only loans money for short periods of time such as a few weeks or a month. The difference with the payday loan lender is they may or may not want a good credit rating. However, this will vary with lenders. So, if one payday loan lender is strict on credit ratings, a competitor down the road may not be.
Just keep in mind that when dealing with both types of loans it’s very important for you to choose the right lender. The reason for this is simple – if you are not careful you can get scammed. Both types of lenders tend to work with customers who are desperate and because of this they know they have a definite advantage in the situation. If you get involved with a company that is not legitimate, they may try to rob you of money.
Another thing to keep in mind is that even legitimate subprime lenders have very high costs associated with borrowing from them. Not only will you be paying a higher-than-normal interest rate, but they also charge higher fees. For this reason it’s a good idea to use such loans as a last resort.
Home Equity Loan
Let’s face it, a person’s financial situation can change in the blink of an eye; all it takes is loss of employment. If you are short on money with bad credit, but you own your own home you may be in luck. Much like a secured loan, a home equity loan allows you to offer the lender security backing the loan.
A home equity loan is a great way to get quick cash, but it only works after you’ve owned the property for some time and have equity built-up. To determine how much equity you have in a home or piece of property, you simply subtract the amount that you owe from the market value. If your number is positive, that’s how much equity you have. On the other hand, a negative equity means you owe more than the property is worth.
Though finding a bad credit loan in Australia can be challenging, it’s certainly not impossible. Just ensure before you sign any contract tying you to a loan, you fully understand the terms by reading the fine print. After reading the information you should know exactly what kind of fees you have to pay and how much the loan will cost you in the end. Regardless how desperate you are for money, the last thing you want to do is keeping going further down.
The best part of obtaining a loan at this point is if you do find a lender to approve the loan and you repay it each month, on time, it will boost your credit score. Thus, making it that much easier for you to get your next loan.