While bad credit means different things for different people, for companies in the subprime lending industry, this often means a credit score of less than 640 since 640 is the national average. And so it goes, loans for people with bad credit are for people who have a credit score less than the figure we already mentioned twice.
If you do a little research online, you will see that there are many loans for people with bad credit out there. We would dare say that there are hundreds of lenders that offer this type of lending product. However, you need to know that no all bad debt loans are created alike and there are difference in the details of what the lenders offer, although they offer more or less the same thing.
They do differ in their loan amounts. While some lenders offer small amounts from $100 to $1,000, there are those that offer that offer high loan amounts of up to $35,000. But a loan amount of that size is usually offered by the largest lenders like Avant. With smaller lenders, you will be hard pressed to find one that offers even $10,000. In any case, aside from the loan amounts, lenders also differ in their interest rates. While it is the standard in the industry to charge over 20% in interest rates, there are lenders that charge up to 30%.
The high-interest rate is the main reason why most people will tell you to hold it and to look for other sources of loans before getting a loan from these lenders that offer loans to people with low credit scores. IF you have a credit card, it might be better to get a cash advance from there, especially if you only need a few hundred dollars. IF you need tens of thousands of dollars, try applying for a bank loan first, or credit from a credit union. Exhaust all avenues of credit before asking a bad credit lender to extend a loan to you.
Currently, the lenders that are considered the best in the industry include Avant, Springleaf Financial, and Peerform. Avant is really for people who are looking for unsecured loans or loans that do not require a collateral, while SpringLeaf is for secured loans that require capital. Peerform, on the other hand, is a peer-to-peer platform where other people lend you the money instead of financial institutions.
The difference between Avant and SpringLeaf is this: With a secured or collateral-based loan, you can get a lower interest rate because the risk of non-payment is offset by the property you offer as collateral. However, if you need a large loan amount, you may be required to provide more collateral. If you cannot offer anything in collateral, you can get a loan with Avant, however, if your credit score is below 580, it will be virtually impossible for you to get a loan, and you will have no choice but to get a loan from those lenders that charge 30% interest rate (APR starts at 9.95 at Avant).