Usually without warning, an emergency can create unexpected expenses. When this occurs and there is no savings or emergency fund on hand, it’s time to think of borrowing.
Finding bad credit loan options for an emergency often starts with looking in the right place. Applying for the right loan will save time, and in this case you should try to get an installment loan.
Those seeking online loans with bad credit need a credit score of at least 550 to 620 to qualify, but it depends on the lender. An installment loan is usually $1,000 to $10,000 to borrow and has terms from 6 to 36 months on average. The interest rates for this option can vary a lot, and reach up to 46% in Canada.
Online lenders of installment loans will have different requirements, where some might require employment and others may allow different benefits like social assistance as an income. Loans with an e transfer option provide an added benefit of fast funding. Some lenders may have unique criteria, but mostly the requirements are similar with most.
Personal loans with bad credit are not really an option, since it requires good to excellent credit to qualify for this kind of loan. For that reason, an installment loan is a more likely option with fair or bad credit for an online loan. The difference between loans (personal vs installment) is minimal other than interest rates, amount you can borrow and length of the loan term.
Can I Get a Loan with Bad Credit?
Having bad credit does not immediately disqualify you from borrowing, it just makes it more challenging at times. Getting a loan with bad credit for an emergency will often depend on just how bad your credit is. Knowing this can help you with applying for the right kind of loan so you can get approved and funded quicker.
While your credit score is usually a major factor when borrowing, other considerations by the lender can include the amount you request, the length of term requested, along with your credit history, current debt, whether you have defaulted, have late payments, or been in a consumer proposal in the past, or declared bankruptcy. Your creditworthiness is mainly determined by these factors and can impact your eligibility of being approved for a loan.
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Comparing Bad Credit Loans
When looking at your options and comparing bad credit loans, you’ll want to look at both the interest rate and APR. The interest rate is the cost of borrowing, where the APR would include any extra costs like origination fees, admin fees and similar.
Not all lenders charge extra fees, but it’s something to watch for when comparing. Note that these fees often come off the amount you are borrowing. If you were borrowing $5,000 and it had an origination fee, this can be anywhere from 0.5% to 5% (or $25 to $250) deducted from the $5,000 requested for a loan.
Reviews can be helpful if comparing bad credit loan options to get an idea of the experience others have had with lenders that might interest you. It’s usually best to consider more than one source when looking at what others might have to say.
RELATED: How to Get a Loan With Bad Credit
Consider the Payments
As you are looking into personal installment loan options you should also consider what you bi-weekly or monthly would work out to be. An important part of borrowing is selecting an amount that you can afford and will fit with your budget. The last thing you want to do is find yourself unable to make your loan payments because the amount you borrowed was too much.
If you have bad credit and were to default on a loan, it could tank your score and take years to recover. It would also make any borrowing options extremely limited, and likely the only lenders that might consider such an application to be offering high interest rate loans. Responsible borrowing suggests only requesting the amount you truly need. Some people that are looking to borrow for one reason sometimes consider adding more to the loan request, often to make an additional purchase. Since borrowing isn’t cheap, this isn’t recommended.
In some cases an installment loan might not be an option with bad credit if your score is too low. Other borrowing options exist for emergency expenses like payday loans. When compared with installment loans they also provide fast funding but can be an expensive way to borrow.
Where to Get Bad Credit Loans
The trouble with having bad credit is your options are limited. Depending on your score you might find a credit union, or less likely a bank, but usually your options are online lenders. Usually an online lender can beat credit unions or banks for rates because they have less overhead and can charge less.
At GoodCheddar you can find options for bad credit loans that can make it easier to go through the process of finding a lender to work with and save you time as well.
Even with bad credit you can find loan options. Don’t let finding a loan add additional stress during an emergency. As you explore your options you should keep in mind to practice responsible borrowing and limit your loan request to what you can afford. This will help you to make your payments on time and avoid issues that can impact your credit profile further.