Best Bad Credit Loan Rates
How often have you wondered if you’ll be able to get a loan with bad credit? People with a bad credit status are often more in need of financial support. They tend to struggle more to make themselves eligible for a loan as compared to those who have a healthy credit history and status.
If you’re struggling with finances and you think that a loan can help make things better, a bad credit loan might be a good option. You read that right – you can get a loan even if you have a bad credit record.
What Are Bad Credit Loans?
Let’s start with what exactly a bad credit loan is. A bad credit loan is a loan that’s issued when you have a poor credit history. It encompasses a good range of loans for people who’re struggling to get an ordinary loan from banks. Usually, these loans have higher rates of interest or require you to pledge your valuable assets against the loan (such as your car or your home).
Understanding The Bad Credit Score
A credit score is defined as a three-digit number that usually ranges from 300 to 850. Lenders equate lower credit scores with higher risk and higher credit scores with lower risk. The lowest credit score is 300, and an ideal credit score is 850; however, most of our credit scores will be somewhere in-between.
In order to understand whether your credit score is terrible or perfect, you must know the scoring model that’s being used. Each scoring model works differently.
For example, in FICO, a credit score ranging from 580 to 669 is considered a Fair score, whereas a score below 580 is a poor credit score. In the VantageScore model, sub-prime borrowers are divided into three ranges of credit score; Fair (601-660), Poor (500-600), and lastly, Very Poor (300-499). So any score below 669 is your alert for ‘bad’ credit.
Ultimate Tip – How Can You Get Best Bad Credit Loan Rates
There is a lot that you need to understand before you can apply for a bad credit loan, especially if you’re looking for the lowest interest rates. Bad credit loans are often associated with higher-than-usual interest rates but that doesn’t mean you can’t find the best bad credit rates anywhere around you.
Some useful tips that can help you bag the best bad credit loan rates:
- Be Realistic
The most important tip for you when you’re looking for the best bad credit loan rates is to be realistic. While you can try to find the lowest possible interest rates, you should have it clear in your mind that you won’t find rates as low as regular loans. If you keep looking for a lender that offers you interest rates as low as regular loans for people with a solid credit history, you might just be looking for a very long time. Your FICO score will help you get a clear picture of where you stand. - Analyze Your Credit Reports
Analyze your credit reports before you apply for a bad credit loan. Your credit reports are a complete record of how responsibly you’ve repaid debt in the past. You can negotiate over the interest rates and see if you can get the best bad credit loan rates only if your credit reports offer an encouraging picture. In case they don’t, your chances to get a loan in the first place are pretty slim. - Look for the Best Lender
Many people end up sealing the deal with the first lender who’s willing to offer them a loan with a bad credit history and often get stuck with higher than normal interest rates. Talk to multiple vendors who’re offering the best bad credit loans and settle for the one who’s offering the best rates. - Look for Additional Fees
Many times, there are additional fees and charges associated with bad credit loans. A lot of people think that they’ve got the best credit loan rates but the hidden charges often take their repayment amounts fairly high. Therefore, make sure that you look for additional fees. Sometimes, a higher interest rate may be the best bad credit loan rate that you’re getting if there are minimal additional charges. Otherwise, a low interest rate with massive additional charges offers no real benefit. - Know How Much You Can Repay
Just because a lender is willing to lend to you doesn’t mean you should borrow an amount that you can’t return. You should be aware of the fact that you’ll have to return an amount that’s greater than what you borrowed (thanks to the interest rates). Your aim should be to only borrow the amount that you need at the best bad credit loan rates that you possibly can get. - Learn About the Rates on Different Loans
Learn all you can about the rates of different loans and settle on a loan type that’s associated with the best bad credit loan rates, even if it means that you’ve got to settle for a smaller loan.
Closing Word
Jumping into making a hasty decision will reduce your chances of bagging the best bad credit loan rates. The right knowledge, right instincts, a lot of patience and research and well-thought moves are your key to getting a loan that works for you.
