How to Get a Personal Loan with Bad Credit

Date posted: Sept. 10, 2015

A personal loan is a great option for emergency situations of which you have no control. It allows you to borrow a moderate sum of money and repay it over the course of several months. Getting a personal loan with bad credit can seem difficult – but it is not impossible.

Borrow from Friends or Family

The most convenient way to get a personal loan if you have bad credit is to borrow from a friend or family member. Although this is not always ideal, it is better than the alternatives, which include high interest rates and strict repayment terms. Often, friends and family are more flexible when it comes to repayment, and if you are very lucky, you will not even have to pay interest. Bear in mind, though, that you can enter into legally binding contracts – even with family members – and they can take you to court if you do not adhere to the terms.

Consider a Secured Loan

Another way to get a personal loan with bad credit is to consider the possibility of a secured loan. Essentially, you will put up collateral in exchange for a sum of money, and the financier holds your collateral until you repay the amount you owe – or until a certain number of days have passed, at which point the lender takes possession of your collateral and may keep or sell it as he or she sees fit. One of the most common secured loans in Canada is the title loan; you exchange the title for your car for a sum of money. Once you repay the loan, you can reclaim your title.

Try Private Lenders

Another great way to get a personal loan with bad credit is through a private lender. Often, rather than focusing solely on your credit score and history, these lenders consider things such as your employment history and your income versus your expenditures. Although you have a better chance at getting a personal loan through a private lender, you should remember that there are typically some high interest rates associated with them. For this reason, find out if you can pay a little more than required each month to bring down the principal balance faster.

Look into Payday Loans

The final way to get a personal loan with bad credit is via a payday loan. These are often quite expensive, but just about anyone can get them as long as you do not have any delinquent checking accounts. In short, you will provide the lender with information about your employment and income as well as your bank account information. That lender will make you an offer based on your ability to repay, and on the date that the payment comes due (which is usually 7 to 21 days later), the lender deducts the amount you owe plus its fees directly from your checking account.

The best way to get a bad credit personal loan is to borrow from friends or family, but if this is not an option, secured loans, private lenders, and even payday loans are all options. Bear in mind that they do present a significant amount of risk, so be sure that you can repay your loan before you sign a contract.

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