Not everything goes the way we want it. This is especially true when it comes to finances. Many Australians struggle with cash, thus becoming unable to cover monthly repayments in a timely fashion. Others default loans because interest rates become unsustainable. You know the drill. As your credit score spirals down into the ground, you put yourself in a position in which it’s almost impossible to get another loan. Did you know that there is still hope for you? It comes in the form of bad credit loans. As their name implies, these loans are given by lenders who don’t mind your faulty score. Not everything is all-good, however. There are some short facts you should get straight before considering a loan. In this article, we discuss what to know about bad credit loans.
Pros & Cons of Bad Credit Loans
They can improve your credit rating
The reason you got stuck with these so-called bad credit loans is that your credit score isn’t so pretty. But a smart (and surprising) way of improving your position is getting one. If you prove lenders that you can handle the financial aid in a responsible manner (read as paying on time) you can be sure that your credit will increase. It is important that you analyse your money-habits and patterns to avoid damages to your credit score. Bad credit loans are there to give you a hand in times of need, but ideally, you shouldn’t need one. One bad credit loan might be the only chance you get to improve your rating by yourself, so don’t forget to pay on time (and please, don’t miss any payments!).
Some people might consider other options like no credit check loans or even payday loans. Contrary to these, bad credit loans don’t have excessive interest rates, typically from 7% to 15% (although, every case is different). Paying late shouldn’t even cross your mind, but let’s say for a moment you’re forced to it once. In that case, the harm isn’t too severe as the penalties aren’t as harsh as the ones from payday loans. If you’re concerned with collateral, you should’t worry! Not all (but some) bad credit loans are secured. Bear in mind that unsecured loans have – naturally – higher interest rates as they represent higher risks. Besides commercial banks, these loans are provided by credit unions and private money lenders, so you have different options to choose from.
Tricky (and somewhat restricted) applications
Even today, a considerable proportion of Australians don’t have access to credit cards. This makes getting bad credit loans next to impossible due to the many strict regulations. If you’re looking for a bad credit loan, then your credit is bad, no way to put it. Lenders will be cautious with your application, so don’t think you have your loan guaranteed. Indeed, bad credit loans are tricky to obtain, and you’ll have to put up more effort. For that reason alone, it is important you don’t waste this chance!
How to Get Them
There are different routes you can check to get bad credit loans. From conventional banks (which might be the hardest if your credit is just that bad) to private lenders. There’s no shortage of private individuals on the Internet that deal with people in delicate financial situations. Your chances of approval are generally higher, but you’ll probably be faced with higher interest rates.
Another, equally good solution is credit unions. They work almost identical to banks, except that they’re owned by the individuals rather than shareholders. The nature of their work is non-profit, so you have a good chance of getting your loan there. The last resort you have is securing your loans with an asset. I emphasise last resort because it can turn your life upside down. Do everything within your grasp to avoid these. Despite this, for some, securing your loan might be the only chance you have of getting the loan. To apply for bad credit loans, you’re going to need:
Passport, Australian driver’s licence (or firearms licence), proof of age card, birth and citizenship certificates, health care card (or pension card) and council rates.
Proof of Income
You will need to bring your pay slips to prove your employment. But Tax Notice Assessment from the Australian Tax Office (ATO) will suffice if you’re self-employed. Your employment history and length of current employment might be requested too.
Take it from the credit bureaus. Remember that your rating will put you in one of five brackets. The more backing documentation you bring to your application, the better.
So, now you know what to know about bad credit loans, if you’re struggling with financial affairs, don’t worry! Bad Credit Loans can give you a hand. It might prove difficult at first, but don’t let that discourage you. Getting the right contact is important. You don’t have to face the financial tempest alone!