Good news for people with a bad credit score!
There are two types of situations where a person may need a loan: for the future and for emergencies. If you’re looking to buy a house in the next couple of months, or your kid will be off to college next year, you could start working on the loan with the hope to receive it when the time comes.
The other are emergencies. For instance you’ve had a medical emergency and need immediate cash for treatment, or your car broke down and you want cash to get it repaired, in such cases you’re looking for a guaranteed loan where there is no room for rejection. There are loans that have guaranteed approval even for people with bad credit ratings.
What is Guarantee for a Loan called?
A guaranteed loan is where a third party assumes the risk of the borrower defaulting on the loan. Guaranteed loans are generally payday loans; which are short-term loans handed out to people for their emergencies. These generally have a higher interest rate because of the risk of bad credit borrowers defaulting on the loan.
These are specifically reserved for poor credit borrowers who would be rejected a loan otherwise. To avoid that situation, a payday loan is granted on a high interest rate. This situation is a guaranteed loan approval no matter what.
Bad Credit Loans Guaranteed Approval
Payday loans are also considered as bad credit loans because these are specifically for people with poor credit. Not only do they get immediate cash for their financial emergencies, but also gives high risk borrowers a chance to fix their credit score. If they pay back their loan promptly, they could actually improve their poor credit.
Types of Bad Credit Loans
- Secured and unsecured personal loans: a secured loan is where you need some sort of collateral to ‘secure’ the loan; this could be a house, car or any of your assets. An unsecured loan doesn’t require any collateral, so the interest rate charged is also very high.
- Payday loans: short-term loans given out as emergencies. The limit can be anywhere from $100 to $500.
- Subprime loans: usually associated with auto loans; if a person is rejected from banks or credit unions based on their poor credit, such people usually qualify for subprime loans.
- Cash advances: this is also a short term loan that is disbursed as cash and is borrowed against your credit card’s available loan.
- Home equity loans for poor credit: these disburse a lump-sum money upfront and you have to pay in installments. However this type of loan uses your house as collateral, so if you fail to pay the loan, the lender is well within his rights to claim a portion of your house.
- HELOCs for poor credit: these loans work like a credit card, meaning you’re allowed to borrow as much as you like.
Bad Credit Loan Rates
Here are some of the rates for guaranteed loan approval no credit check direct lender.
|LENDER||BEST FOR:||MIN. CREDIT SCORE||EST. APR||MIN. LOAN AMOUNT||MAX. LOAN AMOUNT|
|Bad Credit Loans||Poor credit scores||Not specified||5.99%–35.99%||Not specified||$10,000|
|Upstart||Limited credit history||600||8.69%–35.99%||$1,000||$50,000|
|OneMain Financial||Secured loans||Not specified||18.00%–35.99%||$1,500||$20,000|
|TD Bank Personal Secured Loan||Credit building||Not specified||Starting at 5.67%||$5,000||$50,000|
|LendingPoint||Flexible repayment options||585||9.99%–35.99%||$2,000||$25,000|
|Upgrade||Fast funding||620||7.99%–35.97% (with autopay)||$1,000||$35,000|
Note: Sample rates have been extracted online, courtesy of BankRate.
The estimated APR according to FICO score range is as follows:
|CATEGORY||CREDIT SCORE||PERCENTAGE OF PEOPLE IN THIS CATEGORY||ESTIMATED APR|
Mythbuster: No loan is absolutely guaranteed or available for ANY borrower. Even loans that guarantee loan approval no matter what, do have some sort of lending criteria, however, payday loans and other guaranteed loan types are specifically for people with bad credit.
Anyone can have a financial emergency, and with that, it is important that they aren’t rejected due to poor credit. Banks and credit unions do, so such people have the facility to opt for payday loans and other types of guaranteed approval loans. The interest rate is higher because people with low credit are more likely to default on the loan than people with a high credit score.
Shop around for the best loan option from the best lender who would not only accept your loan but will also give you a better rate for it.