The Complete Guide to Personal Loans for Bad Credit People
Do you need money? Is it a big or small expense? Is it a personal or business expense? You may plan to look for a personal loan. These are unsecured loans that you can take out for a variety of reasons from your personal needs to business needs.
Applying for these loans is not that easy. A lender must check your affordability because you do not mitigate their risk in any form. Collateral is not required because these loans are not unsecured, nor do you need to arrange a guarantor.
However, note that you can qualify for these loans only if you have good credit rating. However, there are many people who need to borrow funds but they have bad credit. If you are one of them, you may not be able to qualify for these loans.
Does that mean personal loans in Ireland for bad credit do not exist? No, not at all; these loans do exist. Just because you have bad credit does not mean that you cannot borrow money. Here is what you need to know about personal loans with bad credit.
Do personal loans carry high interest rates for bad credit borrowers?
Personal loans are expensive because they involve high risk on part of the lender and they can be more expensive if you have a bad credit rating. If you are applying for these loans, make sure that you are borrowing money that you can afford to pay back.
Since you will have to pay down the debt in instalments, it will be easier to make payments. Estimate the total cost of the loan using online calculators and find out if you can afford to make the payments.
How can you borrow these loans at lower interest rates?
Even if you have a bad credit rating, you can apply for these loans at lower interest rates. Try to put security. Collateral lowers down the risk of a lender and hence they can offer you money at more affordable interest rates.
Note that the amount of security you put toward the lender will be much more than the amount of the loan. This is because the lender could recoup the money by liquidating your asset in case you fail to keep up with payments.
How much can you borrow if you have poor credit history?
Undoubtedly, you may not be able to borrow the same money as you would if you had at least a fair credit score. Most of the lenders will not entertain your application in case you have a poor credit rating.
There are a few direct lenders who can consider your application. If they believe that you will be able to pay down the debt and put collateral, they may sign off on your loan. However, you will still be not able to borrow a large amount of money. It varies from lender to lender that how much you could borrow.
Will these loans affect your credit score?
Whether you apply for a cash loan or a personal loan, a lender will make inquiry to know your credit score and this will leave search footprints on your credit file, which means you will lose five points from your current credit score. The more the hard searches made, the lower the score will be.
However, there are a few online lenders that make soft credit search. This does not leave hard footprints on your credit file and therefore you will not lose your credit score.
Can personal loans with bad credit improve your credit rating?
Personal loans do not work like small cash loans that require you to pay off the debt in a lump sum. However, personal loans are paid in an extended period of time.
Since you will be paying down each fixed instalment every month on the due date, the lender will inform credit reference agencies of your each timely repayment and your score will automatically grow.
Personal loans in Ireland for bad credit people do exist, but you will have to put security to get money at lower interest rates. Further, they may not allow you to borrow a large amount of money because of your credit rating.