A bad credit personal loan is a type of loan designed especially for people with bad credit record. Because, generally lenders do not provide loans to borrowers who have bad credit history. Bad credit history implies that the borrower defaulted in making payments or made late payments or simply payments terms and conditions have not been honored by the borrower.
Now, there are lenders who offer bad credit personal loan even if you are a part owner of a property or even if you have bad credit to the extent that you missed a few payments on your current credit payments. A bad credit personal loan can also help the borrower to re-establish their credit rating.
Loan Amount & Cost of Loan:
Through a secured bad credit personal loan you can borrow Upto 125% of the value of the asset you provided as collateral or Upto 75,000, though the actual amount varies from lender to lender. The loan amount also depends upon the income level, and whether permanent source of income or temporary.
Rate of interest i.e. APR also varies from lender to lender. It also depends on the profile of borrower in terms of his credit score, source of income, age etc. Therefore, key factors in interest rate are:
Variable interest rates
Monthly installment payments depend on loan amount and interest charged, therefore it is also variable.
Loan Duration:
Usually duration for repayment ranges in between 5 years and 25 years. In case of payment duration, there are two cases. First, in case of short duration loan, cost of loan i.e. interest charged is comparatively lower. Second, incase of loan duration loan, though the amount to be paid monmthly becomes less compared to short duration loan but you have to pay this small amount every month for longer duration, which, finally, makes it costlier than that of the short duration loan.
Use of Bad Credit Personal Loan
You have complete freedom to decide about the usage of the loan amount, once it is credited in your account. Whether you want to renovate your house or you are falling short of cash to buy a car, you can use this loan for anything and everything. Infact, at time borrowers use bad credit personal loan to pay credit card bill and reduce other debts to reduce their monthly outgoings to a more manageable amount
To conclude, a bad credit personal loan is designed for people who have bad credit record. Therefore, even you have bad credit history, you can avail bad credit personal loan. The loan amount, interest rates and payment duration varies from lender to lender.
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