When the country was hit a few years ago by the economic downturn due to the crisis, countless numbers of people became affected by it and lost jobs, businesses and many other sources of income. This in turn, led to their credit scores becoming woefully damaged, making most of them simply ineligible to qualify for any kind of financial aid that they might want to apply in the future. Thankfully, even despite of these unfortunate circumstances, everyone, even those people stuck in bad credit scenarios, are nowadays able to apply for personal loans with bad credit, which are has become a very popular form of financial aid for people facing economic problems.
For the uninitiated, personal loans can be granted to people even if they don’t enjoy a healthy credit score that would allow them to qualify for other types of financial aids. This is precisely why their popularity has soared in the past years. With them, people with bad credit not only can have access to funds fast, but also whenever they need those funds the most.
Now, while the general concept is relatively simple to grasp, there are actually a few important differences in the types of personal loans with bad credit available out there.
So let’s take a look at the two types of personal loans with bad credit available in the market to better know which one can benefit you the most.
Unsecured Personal Loans with Bad Credit
By far the most popular kind of personal loans with bad credit, unsecured personal loans with bad credit do not require customers to offer any kind of asset as warranty in order to “insure” the lending company against any potential loss.
Normally, anyone would guess that, being unsecured, lending companies would be averse to grant this type of personal loans with bad credit. However, reality is quite the opposite: Lending companies are embracing unsecured personal loans with bad credit more and more everyday despite the risks because this helps them expand their clientele. Lending companies understand this of course, but they also know that a lot of really hard-working, honest people are looking forward to re-insert themselves into the financial system and to restore their credit score. For lenders, being able to secure these people as loyal customers is worth the risk.
On the other hand, unsecured personal loans with bad credit have a few drawbacks for customers. To start, unsecured personal loans with bad credit are offered only in smaller amounts by lenders in order to minimize their risks. In addition to that, lending companies will also have far more strict requirements for those applying for unsecured personal loans.
Secured Personal Loans with Bad Credit
As their name implies, secured personal loans with bad credit differ from their unsecured counterparts in that for these to be granted, lenders will require their customers to pledge a collateral good of a value similar to that of the loan they are applying for.
Of course, by pledging a valuable asset, customers of secured personal loans with bad credit can enjoy a few nice benefits. To name a few: Contrary to unsecured personal loans with bad credit, secured ones require minimal time for approval and are granted a lot faster. Additionally, customers of secured personal loans with bad credit are able to negotiate better terms for their loans, including lower interest rates, longer repayments periods and such.
And that’s all there is to it. If you are interested in applying for a personal loan with bad credit either secured or unsecured, feel free to take a look at the top of the page to see if you find something that suits you best.