PHILADELPHIA - When it comes to personal loans for people with bad credit, you can choose several options. There are peer-to-peer lenders, online lenders, and brick-and-mortar lenders. You can also find a loan through a credit union. However, you should be careful when choosing a lender if you have bad credit. Your lender should be able to work with your situation and help you find the right loan.
Peer-to-peer Lenders
Fewer peer-to-peer lenders offer consumer loans, but these sites still offer useful options to consumers with a low credit scores. Peer-to-peer lending can be particularly beneficial for people with bad credit scores because they have low credit requirements, and the loan amount is usually small. However, if you need a larger loan amount or longer repayment terms, you will probably need to find a different lender or use crowdfunding to finance your loan.
Peer-to-peer lenders will look at your debt-to-income ratio (DTI), which is a ratio of your monthly debt to your monthly income. You can calculate your DTI by combining all of your monthly payments, including your mortgage, student loan, and car loan. Then, divide that number by your monthly income. A DTI ratio under 20% is considered excellent.
Online Lenders
Personal loans for people with bad credit are available from several lenders, so it is important to shop around. Rates and fees will vary, so it is important to check each company's terms before applying. Most lenders will charge an origination fee, which is a percentage of the loan amount. Some lenders also charge fees for late-payments and returned checks, as well as annual fees and prepayment penalties. Be patient, as the application process can take time.
While most financial institutions will decline your application because of your poor credit history, several online lenders are willing to consider your situation. Some offer lower rates and easier eligibility criteria, which may be a better option if your credit score is low. Some companies even offer secured loans, which can help you boost your approval odds.
Brick-and-mortar Lenders
Personal loans for bad credit are now available online and are often less expensive. However, a few factors must be considered before making your final decision. For starters, the loan amount and repayment terms may not be what you'd like. You can also use a co-signer to increase your chances of approval.
While some brick-and-mortar lenders are hesitant to offer loans to those with bad credit, many have made this easier for borrowers. Applicants with no credit or bad credit can submit an application, provide income information, and receive a credit report. Often, the lender prefers customers with a credit score of at least six hundred on the FICO scale or 661 on VantageScore. A credit score of seven hundred or higher is considered good. In addition, a credit score of over 800 is considered excellent.
Alternatives To Payday Loans
Payday loans are the last resort of millions of people in financial crises. However, plenty of alternatives to payday loans available can help you get through until your next payday and build a financial cushion for the future. Payday loans are unsecured loans made by private companies. These loans carry a high rate of interest and have short payback periods. However, there are alternatives to payday loans that are more consumer-friendly and have longer payback periods.
One of the most common payday loan alternatives is a pawn shop loan. To qualify for a pawn shop loan, you must have a valuable item that you are willing to part with in exchange for a cash loan. The pawnbroker will then appraise the item and make you a cash offer. Then, you have to agree to accept the agreed interest rate and repayment date. It's important to repay the loan before the pawnbroker sells your property.
Alternatives to SoFi
SoFi offers personal loans in all states, except Mississippi, with low rates and flexible terms. It also offers unemployment protection, allowing borrowers to change their payment schedule while finding a new job. Its loans can be used for any purpose, including credit card consolidation, home improvements, and vacations. However, it's important to note that the lender requires a credit score of 650 or above and offers no branches. If your credit score is below that, you may consider other options.
Another option to consider is LendingTree, which partners with top lenders and allows people with poor credit to get a personal loan. This loan option has good customer service and offers personal finance tools, although it does not offer bad credit loans.
