One of the most complex decisions to make in life is obtaining loans if you have bad credit. Thankfully, technology has improved over the years that help everyone get a personal loan. Virtual banks work in the same manner as traditional financial institutions, but they do not have a physical office. They are ideal for poor credit scores because they can work fast and receive the money within minutes.
Factors in Online Loans
Traditional lenders require you to go into their office, sit down and answer several questions, and then fill out a lengthy application. However, virtual banks allow you to fill out a short application online at your leisure. Instead of heavily basing their decision on your credit score, they look at your employment history, financial stability, and degrees. The credit model is different and only uses a small percentage of your FICO score as a basis in the decision. Some lenders have higher interest rates for those who have no credit at all, but many will work with you based on your income.
Secured vs. Unsecured
There are options for people who have poor credit and unable to obtain a standard loan. Unsecured loans are the kind that is offered based on merit alone. However, secured loans allow you to put up collateral in the promise of repayment. Assets can include homes, vehicles, stocks, or other items of value that you own. You are permitting the lender to take the property if you default on your loan. The benefits of a secured loan include lower interest rates, more significant loan amounts, and better terms. Unsecured loans are more challenging to obtain if you cannot prove financial stability. You must show that you are worth the risk, so many banks will want you to have a specific amount of money saved up if you have poor credit. A good note is that borrowing smaller amounts of money in an unsecured loan will improve your credit score if you continue to make payments on time.
If you find yourself still struggling to find a financial institution to loan you money, you do have other options. People who have long-time relationships with their banks and maintain a good record can work out an agreement for a short-term loan. Often, this loan is relatively small and is up to the bank on the terms of the contract. When you talk to your bank, the worst that happens is they will say no, but if they do agree, make sure you are on time with payments. Sometimes, a bank will offer you a cash advance based on your paychecks. Advances are high-risk and come with very high-interest rates. You will also need to have a record of steady income to prove you can pay the money back over a short period, with amounts being taken from your direct deposits. While not advisable for either party, these are great options for urgent matters.
If you need money, My Quick Loan bad credit advisors are ready to discuss your options. Knowing what to look for is a start, so do not let your credit score scare you away from attempting to receive a loan.