Things happen. A big expense pops up. Cars break down. Some things cost more than you thought they would and you’re tight on cash for other expenses that also have to be covered. If you think you need less than a thousand dollars, a bad credit loan might be one option for you. You’re probably wondering if bad credit loans exist and Friendly Lender is here with an answer.
Bad credit loans are possible through Friendly Lender’s direct lenders we work with in Canada. If you’re considering requesting a loan, there’s no need to wait. Fill out the form today! It takes just a few minutes to complete and as long as you completely fill in the form with accurate information, you should receive a decision quickly.
So what is a bad credit loan? These are personal loans, or payday loans, that are offered to borrowers with bad, poor or no credit. There are many loan options out there for individuals in all kinds of situations and they are offered by all sorts of financial institutions and lenders.
Bad credit loans do sometimes come at the cost of a higher interest rate. Should you receive an approval for a loan request, be sure that you read your contract thoroughly so that you completely understand what this loan will cost you and be sure that you can afford to repay your loan within the term. This part is important because you do not want to have another dark mark on your credit score.
You’re probably thinking, “Hey wait! I have bad credit and I’m flat broke. Why are they charging me MORE money?”
Sadly, that is the case with situations such as these. Lenders charge people with bad credit higher interest rates because people with bad credit are more risky to lend to. This means that the odds that you will fail to repay your loan are higher, which means they have to try to get back as much of the loan as they can somehow. Typically lenders will let you borrow smaller dollar amounts to people with bad credit as a result of this too.
This is how lenders compensate for taking this risk. It helps offset the fact that some will default on the loan.
To further clarify, consider this example: 10 people borrow money from a lender. Let’s say that 2 of them don’t pay the money back. In order to continue to remain in business and be able to lend money to people in need, the lender has to make enough money to cover the lost funds from the 2 individuals that defaulted on their loans, and still profit. When lending to people with good credit, the odds that even one individual in the group of borrowers will default are said to be more than 4 times less, meaning that the lender does not need to charge as much to make a profit.
If you are considering short term loans, make sure that you fully understand the implications of applying for such a loan. It might not be to your benefit to do so.
There are two types of loans. Secured and unsecured.
Unsecured loans are a loan that is given with a promise that you will repay the debt within the term, without any collateral that can be claimed by the lender in the event that you fail to pay. The lender will pursue repayment through other means, such as a collection agency or other legal methods. Some common types of unsecured, bad credit loans include: credit cards, student loans, and personal installment loans.
A secured loan requires that the borrower provide an item of equal or greater value to that of the amount of the loan, such as a home, car or piece of jewelry as collateral. This “secures” the loan, ensuring that the lender will be legally allowed to seize that piece of property in order to recover the amount of money the borrower failed to repay. Common types of secured loans are the kind of loans you might get through a pawn shop, mortgages or car title loans.
A payday loan is considered to be a secured loan because you’re securing the loan against your next paycheque. These types of loans may be easier to qualify for with bad credit, because the lender can reclaim their losses should you fail to repay.
Requesting a bad credit loan with Friendly Lender is easy.
Simply visit our website and fill out the form for the loan that you feel suits your needs. Friendly Lender sends your request to our direct lenders, giving you more chances to receive an approval for your loan request, even if you have bad credit, a poor credit score or no credit at all. We also have a team of experts available to help you determine which loan might be the best fit for your situation.
Choosing the correct loan for you is important because this will ensure that you are less likely to run into trouble when repaying the loan within the term of your agreement. Repayment inside the term can help you rebuild your credit score if done with careful thought.
To request a bad credit loan, you will need a few things:
Proof of a consistent income is needed to let the lenders that you can repay your loan on time, should you have a bad credit score. If you receive a steady income, it can reflect better financial capability than your credit score might show and your credit score is sometimes slow to improve.
Banking account information is required so that the direct lenders that Friendly Lender works with can deposit the loan amount directly into your account, which means you will get access to the funds quickly than if a check was sent in the mail. This way, there are no documents to lose and no need to worry about depositing the check yourself.
Some lenders may say that they offer “no credit check loans” It is important for you to know that there is no such thing. Every lender does a credit verification, even if all they do is look at your paystub to verify your employment. Even that is considered a credit check. Do not be fooled by companies that make this claim.