It can be tough and also frustrating to get money loans approved if you have bad credit. Moreover, it is degrading and humiliating to receive constant rejections from lenders. Therefore, before you choose the best types of bad credit loans to apply, ensure that you research your options to make the most favorable financial decision. When shopping loans for bad credit, you’ll find quite a plethora, each with different conditions, terms, and interest rates. These dynamics will cumulatively determine all your expenses during the loan period.
Types of Loans Available
Loans for bad credit range from short term, auto title loans to conventional auto, personal, and home loans. All of them have their merits and demerits. However, some of them are a cleverer choice considered to others.
Auto Title Loans
To qualify for an auto title loan, you will be required to use your car as collateral. The total amount of money you can receive will vary, but will be less than the value of your car. In many instances, you will not need a credit check to qualify for such a loan.
Don’t confuse auto loans and auto title loans. Auto loans for Canadians with a bad credit score are designed for car buyers. These loans have less favorable terms including a lower loan amount and a higher APR than loans designed for car buyers with a good credit score. Although there are genuine lenders who focus mainly on helping clients with bad credit scores, there are unscrupulous dealers who may take advantage of you by making you believe that your credit is worse than it is. Such lenders will demand that you purchase add-ons for them to finance you.
There are money loans available for individuals with bad credit scores through online lenders, brick-and-mortar banks, and credit unions. The amount a lender will be willing to lend you will be based mainly on your credit score, and if the loan is secured or unsecured. Credit unions can be a good option for you if you want a loan locally around Canada. This is mainly because they are more flexible with their lending criteria especially if you are a longtime client.
Applying for a secured bad credit loan can be a good option because you will qualify easily and receive terms that are favorable such as low APR and a higher loan amount. However, ensure that you are able to repay the loan on the agreed date to avoid losing the collateral you use.
Make sure that you evaluate all the choices available when examining the best bad credit loans. Ideally, search for lenders who are aware of your credit score. However, ensure that you understand which type of loan to apply and which ones to avoid. If you would like to learn more, the We Loan Money blog is a great reference for additional information and resources.