There may have been a time when the banks used to help, but default, account delinquency or bankruptcy mean that this will no longer be the case. The majority of people will now find it very difficult to get a loan with bad credit even through sites like https://www.cobrapaydayloans.co.uk. Although borrowing money will now be more expensive, extremely bad credit loans are still available. Pawnbrokers, payday lenders and credit unions provide guaranteed cash loans with no credit scoring at any stage of process.
Why are Extremely Bad Credit Loans Still Available?
A poor credit history will show on a personal credit report for a period of 7 years. In the case of chapter 7 bankruptcy, it is 10 years. Bad credit score loans may not be a niche that the banks are particularly interested in, but there are lenders who specialize in assisting customers who have past credit problems. Despite the high default rate among customers, bad credit loan lenders may be prepared to provide a fast cash advance at a rate of interest that reflects the risk they face.
Criteria for Guaranteed Cash Loans from a Bad Credit Loan Lender
Pawnbrokers have the most lenient lending criteria because they have collateral so it is easy for them to recover their money. This means that an extremely bad credit loan from a pawn shop is an ideal loan for unemployed people. In order to borrow money from a payday lender, credit union or get a car title loan, the customer will need either a full-time job or be able to demonstrate that the repayment of debt is affordable. All customers must be able to prove their identity through the provision of identification.
Types of Extremely Bad Credit Loans
- Payday products. It may be possible to get a payday cash loan, provided that the customer has a full-time job and their own checking account. Low credit score loans are available for up to $1,000 within 24 hours.
- Auto title loans. Customers take out a vehicle title loan against the available equity. It is normally possible to borrow up to 50% of the equity, provided at least three-quarters of any car finance has been paid-off. Regularly used as a source of larger very bad credit loans.
- Cash advance from a credit union. Following a financial assessment, a credit union loan may be offered to a member. Members join on the basis of a shared interest, such as locality.
- Pawnbroker loans. A pawn shop loan is secured on the provision of an item of value, including gold, jewellery or silver. The item will be assessed and a maximum cash advance determined.
- Borrow money from a family member. A guaranteed cash loan from a member of the family is an affordable way to borrow money with no credit checks.
How Much Do Very Bad Credit Loans Cost?
Extremely bad credit loans are a risky proposition for any lender so the rate of interest does reflect this. A $1,000 guaranteed cash loan will accrue approximately $250 of interest in just one month. Interest rates will vary so it’s important to compare different lenders. In the case of payday and auto title loans, many states impose maximum limits on both the amount that can be borrowed and the maximum APR. For example, the maximum interest rate on a vehicle title loan in New Hampshire is 36%.
Consequences of Defaulting on Extremely Bad Credit Loans
If collateral is provided to secure a very bad credit loan, as is the case with a pawnbroker cash advance or an auto title loan, default will result in the repossession and sale of that asset. There aren’t likely to be any further consequences as there is sufficient equity to cover the full amount borrowed. Payday loan lenders are likely to continue to apply interest and charges and debt collection agencies will pursue that person for the repayment of the balance. A credit union is an organization that works for the best interests of its members so is likely to work with that person to achieve an amicable resolution.