Personal Loans for Bad Credit
Usually, when you apply for a personal loan, banks and lenders will look at your credit score as part of the process to evaluate whether or not you can be approved for the loan in question. In other words, a credit score can have a major impact on a person’s likelihood of getting a loan or being denied. If you have a low credit score or bad credit, you may find it hard to get a loan in the usual way.
Fortunately, there are other options out there for people with bad credit, and it is possible to get personal loans with bad credit. Some lenders specifically specialize in loans for bad credit and will accept applications for people with poor credit scores. Here are some key factors that are important to know about personal loans for bad credit:
- Lenders – There are only certain lenders who offer bad credit personal loans. Banks usually won’t offer this kind of loan and almost always carry out credit checks. So you will need to find the correct lenders who are happy to work with individuals who have bad credit if you wish to apply.
- Secured or Unsecured – Bad credit personal loans can be both secured and unsecured. Secured personal loans are loans that are backed up by some collateral, like a house or car, which the lender can take if you don’t make repayments. Unsecured loans have no collateral and are regarded as less risky for the borrower.
- Interest – Interest rates on bad credit personal loans can vary. Often, one of the concessions you have to make if you apply for this type of loan is that you’ll usually need to pay a higher interest rate than you usually would if you had a good credit score. This is often cited as one of the downsides of bad credit loans, and it’s something that borrowers need to take into account.
- Process – The application process for bad credit personal loans can vary from lender to lender. Some will still need to carry out credit checks. In contrast, others will skip credit checks and instead want to look at other aspects of your financial situation, such as your monthly income and expenditure, before deciding whether or not to approve a loan.
Canadian Providers of Bad Credit Personal Loans
Some examples of Canadian lenders that offer bad credit loans include:
- Magical Credit
- Mogo
- Money Mart
- Fairstone
- SkyCap Financial
- GoDay
- Eastern Loans
- Loan Away
- Spring
- Cashco
- Cash 4 You
- Lending Mate
Each of these lenders has its own terms, conditions, fees, interest rates, and application processes. It’s important to compare providers and understand what each lender has to offer before deciding what loan you want to apply for.
How to Choose the Best Personal Loans for Bad Credit
There are a lot of loan companies and lenders out there who can offer you bad credit personal loans with no credit check. Choosing between them can be a challenge, so here are some factors you can take into consideration to help make the decision easier:
- Eligibility – Lenders will have different eligibility requirements, including minimum income levels, for example. It’s best to find a lender with requirements that match your situation to give you the best chance of being approved for your loan.
- Interest Rates – As stated above, interest rates on bad credit loans with no credit checks can vary enormously. It’s recommended to get quotes from different lenders and compare rates to find the best value loan.
- Fees – Lenders may also charge a range of fees, such as origination fees, administration fees, and payment penalties, which could add up and cost you a lot of extra money. So this is something you need to be aware of.
- Terms – Different lenders may offer varying repayment terms; some will demand full repayment on loan within a few years, for example, while others might allow you to take longer to pay off your loan.
- Amounts – Maximum loan amounts can also vary from lender to lender; some may allow you to borrow large amounts, while others will have a relatively low maximum threshold.
- Reputation – Reputation and customer opinion are also important factors to think about; it’s best to work with lenders that are regarded as trustworthy and reliable to avoid any issues with paying off your loan.