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Bad Credit Woes: How Much Can I Borrow?
As many people assume, having bad credit doesn’t necessarily mean you cannot borrow any money. What it means is that you have a poor credit rating, may be for any one or all of the following reasons.
Because in the past you have defaulted on your loans, have run in to arrears on loans, you have court judgements because of defaults on loans or arrears, fraud or are bankrupt.
Still, nothing of this can stop you from obtaining your loan; instead, will make it a little difficult than otherwise. The interest rates you will get, although, won’t be the prevailing best, there are many credit products, especially targeting those who are having adverse credit woes, making it possible for such people to have access to credit as well. You may try your hand in getting one of these types of loans explained below.
Payday Loans
Loans of small amounts, Payday Loans are intended to help people who are faced with short-term financial difficulty. With no credit checks, all what you need to do, to be eligible, is to be able to prove that you are employed and that your salary has been paid into your bank account for the last two or three months.
A fee is added to every payday loan amount to be repaid. This, although may not seem like much, it equates to a high annual percentage rate (APR), and would grow even bigger if you miss a payment or extend the loan. You are expected to repay your payday loan within the next pay period. Any extension will cost you an additional amount as fees, until you end up owing several times more than the original amount you borrowed. You have to fully repay your payday loan before seeking another.
Doorstep Loans
From a Doorstep lender you can borrow more. These are lenders who will visit your home to discuss what you need to borrow, and would give you the cash then and there. They would agree on the interest to be paid along with the repayment terms. Doorstep lenders, often, would expect you to repay your loan in weekly instalments.
Doorstep loan interest rate is prohibitive, can be as high as 250% or even more. People taking doorstep loans, might be doing so, thinking they can’t get credit from anywhere else. If any payments are missed, as it often happens, the doorstep lender is likely to seize possessions and even resort to threats and violence. Mean while the amount will keep piling up to an exorbitant amount.
Secured Loans
Perhaps you can get the biggest amount through a secured loan. A secured loan is secured on the value of the equity of your house. If you have any existing debt, this amount is subtracted from the amount you can get. With a secured loan you can often get a lower interest rate and a higher amount than with any other type of loan. Sometimes, people are able to borrow up to 125% of the value of the equity of their house. But you need to be aware that this can work well only in places where the property value continues to rise. A Secured Loan, although, can offer you the most amount of money, it has its risks too, that is, if you default on your loan payments your lender gets to keep your home. |