There are a number of reasons people fall behind with their bills and accrue bad credit. Whether you are filing bankruptcy, dealing with unexpected medical expenses, recently lost your job, or never built up credit, there is help out there. Under these circumstances, it can be difficult to obtain a loan such as an auto title loan, but there are various types of no credit personal loans can help you through these hard times by providing the cash you need.
Depending on why you are seeking the loan, there are three types of bad credit loans.
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Secured Bad Credit Loans
If you own assets, you may consider applying for a secured loan. This type of loan can be obtained through large banks or financial institutions which can be a huge advantage since you can easily verify they are a reputable lender. During the application process, the lender will require that you provide some type of collateral in order to secure the loan. The collateral will depend on what assets you have in your possession ranging from cash savings to equity in your home or vehicle.
If you don’t own collateral, you still have the option to obtain the loan if you have a trustworthy person who can act as your cosigner. Should you be unable to pay your debts, your cosigner will be responsible for your payments. Since you have someone vouching for you, this will also provide a guarantee. Without collateral or a cosigner, you will need to explore other options.
Specialized Loans Offered through Community Organizations (Aus example)
Depending on your intended uses for the loan, there are also a number of community organizations that offer assistance. Good Shepard Youth and Family Service is a great example of a community organization whose aim is to help disadvantaged Australians across the country. They provide no interest microloans for specific purposes such as household goods, education costs, and vehicle repair. Good Shepard also works with National Australia Bank to provide larger loans with a program called StepUp which carries low interest rates for similar needs that require a bit more funding.
Contact a local representative to see if you qualify for these types of loans or other financial assistance. In addition to their loan and financial assistance programs, Good Shepard also provides a number of counselling and savings programs to help you become more financially stable.
Payday Loans (really should be used as last resort)
A payday loan or cash advance is another option that will provide a small loan to be paid on your next payday. The terms of this loan are generally only a few weeks and carry high interest rates. You may be able to find other lenders that provide small loans for longer periods, but they are usually only intended for emergencies. This option is reserved as a last resort and revered as a one-time only option. If you need immediate car repairs or medical expenses, this type of loan will keep you afloat until your next pay check.
Avoid resorting to this type of loan to pay regular expenses and be sure you able to repay it on time since they often carry higher interest rates and penalties if you default. If you are unable to repay the loan right away, you could also face overdraft fees from your bank which will only make matters worse. Also, be cautious since there are many scam artists posing as legitimate short-term lenders.
Before applying for a bad credit loan, do you research and consult with your financial advisor to determine all your options. Even if you have bad credit or no credit, you can still receive the financing you need. Be sure to do your research and ensure you are working with a reputable lender. These types of loans can save you in an emergency, but be sure to read the fine print so you are aware of all costs and applicable fees once you agree to their terms.