Loans for Borrowers with Money Problems

Bad credit loans are offered to borrowers with financial problems, poor payment history, delinquencies, bankruptcies, arrears, and missed payments. Private lenders and other financial organizations offer financing to people with poor scores, rating, and history.


Lenders offer two types of financing, secured and unsecured. Borrowers with bad rating find it more difficult to qualify for unsecured loans and are often required to pledge some asset as collateral. When it comes to lending requirements, credit score, rating, and history are not as important as income and the value of the asset pledged. Lenders require that borrowers have a fixed, stable income. Some banks offer financing to salaried employees only while others extend loans to self-employed individuals and those with seasonal income. Most lenders consider them high-risk borrowers and have stringent lending criteria. They offer high interest rates because of the higher risk of default.

Types of Loans

Lenders offer different types of financing, including secured credit cards and personal, consolidation, and auto loans. Consolidation loans are available to customers with high interest rate cards. The main benefit for borrowers is that payments are more affordable. Different financial institutions offer this type of financing, including credit unions, card issuers, and banks. The repayment process is more convenient and simple because there is only one payment to make. Financial establishments also offer unsecured loans, but this product is often reserved for applicants with excellent credit histories and high incomes. Borrowers can use the money for day to day or large purchases, vacations, and unexpected expenses. Customers with poor or fair credit are usually offered a very high interest rate, which increases the cost of borrowing. While high interest rates are an obvious downside, this is a good option to build or rebuild credit. Moreover, such people have more limited options, and applying for a credit card or loan may be the only way to avoid bankruptcy, foreclosure, or a lawsuit.

Other Advantages

One advantage is that lenders do not run credit checks. Traditional financial institutions are often unwilling to deal with customers with a poor payment history and require more paperwork. This means that the application process is longer and may take a couple of weeks. Some borrowers are in a desperate need for money and cannot wait that long. This is important for borrowers who face an emergency such a car repair. Another advantage is that many lenders offer their products online, which allows them to save on rent and other expenses. Thus they are able to offer better interest rates on their products. Borrowers find it easier and more convenient to apply online, and it takes less than 10 minutes in most cases. Some lenders also advertise instant approval in less than 60 seconds.


There are several alternatives to consider, including pawn shop brokers, payday lenders, a cash advance from your employer, a loan from a friend or family member, and a bank overdraft. The problem with pawn shop loans is that they are secured meaning that you can lose the asset pledged as collateral. Payday loans are a good option in that you will get quick cash to repay over a short period of time. They are offered by online businesses, finance firms, and lending agencies. The only downsides are the high fees and interest charges. An overdraft is another option and while this is a costly way to borrow, it is still less expensive than bounced check fees.

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