Bad Credit Personal Loans
Bad credit personal loans are options for people with bad debt to consolidate their debt payments at a lower interest rate or to make large purchases that they otherwise couldn't.
A personal loan is a small line of credit with relatively low interest rates (7% to 25% APR on $3,000 to $100,000) that can be used to consolidate debt or make major purchases. Bad credit loans tends to have a higher interest rate.
Frequently, personal loans are unsecured, which means you put no collateral on the loan – you're just making a promise to repay your loan. There are secured personal loans available, too. Secured personal loans, even to someone with bad credit, tend to have lower interest rates because having the right to collateral lowers the lenders risk (the lender can recoup their cost if you don't pay back the loan completely).
Bad credit personal loans to consolidate debt
Benefits of debt consolidation bad credit personal loans
- Lower Interest Rates
- Consolidate Payments
- Variable Term
- Quick Funding
- Easy Application
- Pay off Debts Early
If you have a lot of high interest rate debt (too many payday loans, adjustable rate loans, etc), a bad credit personal loan is a great choice to consolidate your debt.
You can replace several monthly payments with one single payment with a bad credit personal loan. You can also extend or shorten the term of the bad credit personal loan to improve your interest rate or your term to repay your debt . Personal bad credit loans are a fixed-term and fixed-rate loan.
Also, some other types of debt have penalties to prevent you from paying off your loan early. Personal loans do not have any penalties to prevent you from paying off the principal early.
Bad credit personal loans to fund major purchases
A traditional lender may not be willing to loan you enough money to make a large purchase if you have bad credit. Here are some purchases that a bad credit personal loan can help you make:
- Furniture Purchase
- New or Used Car
- Mortgage Down Payment
Use a bad credit personal loan to purchase furniture
The APR on a personal loan, even a personal loan with bad credit, is much lower than the APR of a finance contract with a furniture store (and personal loans can be as little as $3,000).
Personal loans do not have as many fees as a finance contract at a furniture. Also, since you can just pay off the loan early without penalty, you don't have to worry about being hit with interest that you weren't expecting to pay.
Personal Loan to purchase a car
You can also use a personal loan to purchase a boat or to fund an auto loan. If you're not able to obtain a bad credit auto loan from a lender, a personal loan may allow you to purchase the vehicle more easily.
Mortgage Down Payment
If you don't have the 10% or 20% of a the purchase price of a house, a lender may charge you more and higher fees. Sometimes, you might pay an extra point in interest (an extra 1% interest) which can translate into hundreds of thousands of dollars over the life of the loan.
If you can use a personal loan to borrow the amount for the down payment (at a relatively low interest rate with a fixed rate and fixed term), you may be able to purchase a home sooner.