Bad credit loans come in different shapes and sizes, so to speak. There’s not only an inherent “bad credit loan” that applies in all circumstances. In fact, there are no less than 4 distinct types of bad credit loans.
Each of them has its own particularities that make it stand out from the rest. It is very important for you to know all of them, in order to be able to assess what type would be best for the situation you are in. Bad credit loans wouldn’t be of much help if you chose them for all the wrong reasons that one can possibly think of.
Types of Bad Credit Loans
- Payday loans
Payday loans are the most common. They are usually granted to people who do not need sums that exceed $2000. They can be repaid in a few months, depending on the term one has established with the creditor.
Of all types of bad credit loans, the payday loan is the most “inoffensive,” since it does not imply an outstanding debt and can be paid back quickly. If you’re in an urgent need of cash, but you don’t want to get another huge loan out (good thinking, by the way), a payday loan is the best alternative you have. $2,000 is a sum that can definitely come in handy in times of need.
Moreover, you won’t lose sleep thinking how you’ll ever be able to cope with high-interest rates and a short term on your loan. Therefore, get a payday loan if you need fast economic support with fairly decent terms of the agreement.
- “Cash-in-advance”
This type of bad credit loan is usually provided to credit card owners. This will add up to your debt, that’s certain, but it’s a good tool if used properly. Some people argue that ‘cash in advance’ is same as the payday loan, but there are a few minor differences between them.
Cash advance is one of those types of bad credit loans that applies to credit card owners. The lender agrees to let you borrow a certain sum of money, and you can withdraw chunks of that total amount whenever you please. Of course, you cannot exceed the amount you’ve agreed upon with the lender that offered you the loan. Contrariwise to what you might think, this is a really good thing, because it won’t allow you to increase your debt.
- Consolidation loans
Nowadays, you can get a consolidation loan even if your credit score is tainted. Such a loan can roll all your existing loans in just one, but it often comes with high-interest fees in addition to other fees, if the source is a private creditor.
Consolidation loans enjoy some popularity among the types of bad credit loans because they are quite efficient and they offer genuine perks that help people in debt get rid of the burden of owing money a lot quicker. Mind that such a consolidation loan isn’t for everybody. There may be better alternatives for you. Give yourself the time to study the market, to assess what type of problem you have and decide afterwards.
A consolidation loan can do wonders if used properly and when one should use it. If it’s not, however, you might end up paying higher interest rates than you did on multiple other loans. You might find it difficult to find a consolidation loan if your credit score is dusty, but you can rest assured that it’s not impossible.
- The Line of Credit
The “personal” line of credit, as it is often called, allows you to withdraw a certain amount of funds from a certain credit card. Unlike the other types of bad credit loans, this comes with a limit that has been established before initiating the line of credit.
This is an extremely efficient way of getting immediate access to funding and it is very similar, as you can see, to the cash-in-advance. The greatest benefit of line of credit is that it can be offered to people with bad credit almost instantaneously, provided the lender is all in for the application.
Concluding Remarks
Different types of bad credit loans automatically serve different purposes and come with their own sets of perks and disadvantages. These have to be researched properly before choosing them, so you don’t get in more chaos than you already are.
All of them are provided bybad credit loan https://badcreditloanss.net.au. Surf on the site and search for the offer that suits you best, while receiving professional advice from the team.
Bad credit loans are a godsend for thousands of people worldwide. Sometimes it is not an individual’s fault that his credit score has dropped considerably. A sudden illness, for instance, can account for that. Private creditors understand that, and that’s the reason why they are willing to help such people.
