The Most Important Things to Know About Emergency Loans for Bad Credit
When you apply, youll have to provide some basic personal information, like your address and Social Security number. Youll also want to have financial records ready since your lender might scrutinize your application more closely than other applications.
If youre comfortable doing so, offering a written explanation of the reason youre applying for a loan could help. If you can show that your need for a loan is a one-time thing and not a pattern of financial irresponsibility, it could help.
The most important thing to know about emergency loans for bad credit is that you should avoid alternative and non-traditional lenders, like payday lenders, at all costs. Payday lenders charge incredibly high fees and interest rates, with effective rates often exceeding 100% or more.
A lender might be more willing to work with someone if they understand that you need help repairing a car so you can keep going to work compared to someone borrowing money to go on vacation
If you get a loan from a payday lender, its easy to fall into a cycle of debt that you cant escape. You should always work with more traditional lenders.
Also, keep in mind that even if a lender encourages you to apply for a loan or offers you a preapproval, you arent guaranteed to get a loan. Dont put all of your eggs in one basket and bank on a single lender. Consider multiple options so youll have a backup plan if one application gets denied.
A common feature of loans for people with poor credit is a variable interest rate. These rates are often lower than fixed rates, at least to start with, which can make them a tempting way to try to save money. However, if rates rise, your monthly payment rises, possibly too high for you to afford. Picking a fixed interest rate might be more costly at first, but it provides security and peace of mind because youll know that your payment wont change.
Finally, keep in mind that you can usually shop around without impacting your credit. Lenders can prequalify you for a loan and give you an estimate of the interest rate and fees that theyll chargeparing multiple offers to find the cheapest one can save you a good amount of money.
How to Choose an Emergency Loan
Because youre experiencing a financial emergency, one of the most important things to think about is how long it takes the lender to distribute the money. Some lenders specialize in disbursing funds quickly while others can take weeks to approve your application and put the money in your account.
Beyond the speed of borrowing money, you should think about the loan amounts you can choose from. Lenders have different minimum and maximum loan amounts and you want to choose one that will let you borrow as close to the exact amount that you need as possible. Borrowing too little to cover your expenses doesnt make sense and borrowing more than you need means paying more interest and fees.
Also, keep in mind the term options. Each lender has different term options, though terms ranging from three to seven years are common. Shorter terms mean higher monthly payments but a cheaper loan overall. Longer terms reduce your monthly payments but make the loan more expensive in the long run. You should find a lender that lets you choose a term that strikes a balance between monthly affordability and overall loan cost.
Whats great about Fiona is that it can match you with lenders that meet incredibly specific needs. Do you want to borrow $100,000 an amount that most lenders wont be willing to lend? Fiona can help you find lenders who lend large amounts. Do you have poor credit? Fiona has a network of lenders that specialize in lending auto title loans Minnesota state to people with less than ideal credit histories.
Also, consider the type of loan youre applying for. If you have bad credit, a secured loan can be much easier to qualify for. The drawback is that secured loans require collateral, so you need to be able to provide backing for your loan, such as a bank account or a car. If youre planning to apply for a secured loan, youll need to choose a lender that offers secured loans.
