Bad Credit Loans at Nation21
Sometimes emergency expenses pop out of nowhere without any signal. When faced with such circumstances, all you need is a way of getting cash immediately. If you’ve been in such a situation, then you probably know that anything that won’t avail the cash now feels like mockery or an insult.
If this life was perfect, every person alive would be having a fat savings account that would provide the necessary cushioning in times of financial difficulties. But that’s not the case and the situation can be worse for some people. A recent study indicated that more than 60% Americans have no more than $500 in their savings account. This means these people are incapable of dealing with an emergency expense without seeking outside funding. If you dig further in the financial research, you discover an even more scary fact. Over half of the American population is plagued by bad credit history meaning their FICO scores are way below 620.
Therefore, every time you find yourself in a situation that demands some extra cash that you don’t have, know you are not the only one. There are millions of people with bad credit history and are in a constant need for financing. You’ll be pleased to realize there are lenders who specialize in offering bad credit loans. A good place to start is at Nation 21 where you can easily find a loan to deal with that pressing expense before it gets out of hand.
What are bad credit loans?
A bad credit loan is a form of a personal loan that is designed to benefit individuals without a credit history or those with bad and weak FICO scores. These loans are offered by many traditional and unconventional lenders and they come in different sizes and designs. You can get these loan products from banks, credit unions, peer-to-peer lenders and online lenders.
However, one feature of these loans that cuts across all lenders is their high-interest rates. This results from the tendency of lenders to cautiously handle customers with weak credit scores. As a rule of thumb, people who have excellent credit history tend to pay less for their loans. At the same time, individuals with low scores will be paying a higher interest rate for the same loan from the same lender.
To determine whether your credit score is good or bad, you should first check your current credit standings. You can achieve this through sites like Experian or CreditKarma. Basically, if your score falls below 630 it means you have bad credit.
How a loans for bad credit works
At first, borrowers are confused by the fact that most lenders are ready to give them high-cost loans when they know very well that they are not financially fit. Although it’s unfortunate, it also makes a lot of business sense.
The fact that you have a damaged credit history indicates that you have a habit of making late payments when you haven’t defaulted. This means one thing to the lender; they are putting their money at risk when they lend it to you. And the argument is based purely on your credit history. Most lenders understand that you’ve had difficulties in meeting your credit obligations in the past and they can’t find anything that convinces them you’ve changed. So they tread carefully knowing that the money can either come back or just fly away.
To mitigate the risks that are attached to these loans, lenders end up applying huge interest rates on bad credit loans. The idea here is to compensate for the money that can be lost if a few customers defaulted on their loans. For instance, a lender offers some money to a group of 50 customers and 10 of these fail to meet payment obligations. To recover the lost money, this lender charges higher interests from the remaining 40 so that the business can make profits and stay afloat. However, the situation is quite different when the customers involved have great credit history and charges are not that high.
Options for bad credit borrowers
Basically, a bad credit borrower can choose between a secured and an unsecured loan.
Unsecured loans for bad credit will only require you to put your signature on a contract indicating that you are ready to honor the terms of the loan. Here, the lender is at greater risk because all they have is a signature and your promise. However, the contract is a legal document and it allows the lender to recover their money if in case you default. In most cases, lenders will hand over a delinquent account to third party collectors for recovery but they can also seek legal redress.
To get a secured bad credit loan, you’ll need to use equivalent collateral. Depending on the amount you intend to borrow, you can use a car, home, or even some high-value jewelry. This implies that the lender has the legal mandate to seize the collateral in the event where a borrower is not able to repay the loan. This type of loans gives a sense of security since they have something to fall back to in case of a default. A good example of secured loans is the popular title loans or pawn shop loans.
Arguably, most payday loans qualify to be categorized as secured loans. Despite the fact that you’ll not be using your home or car as collateral, the lender is covered by your paycheck.
How to deal with risks associated with bad credit loans
Assuming you were shopping for some furniture or décor for your living room. You’d be better off if you only engaged with dealers with excellent ratings and tons of reviews from satisfied customers. In addition, dealers with friendly and supportive customer service make it easier for customers. On the other hand, there are dealers selling the same product but they lack the social proof to back up their credibility.
Irrespective of what you are buying, it’s very important to work with trusted merchants. Because this is a free market, there are lots of players competing to offer you a loan. Most of them will make great promises and try to convince you instant cash. Before taking the bait, you need to consider their reputation and what their customers say about them.
If you genuinely need a bad credit loan, it’s possible to find a responsible lender who will not only give you the money you need but also help you become financially better. Here are some things you need to look for in a good lender.
Offers installment loans for people with bad credit
Although payday loans and title loans may seem attractive at first, they can be a source of misery to most people. If anything goes wrong with the repayment schedule, you could end up spending more than 6 months trying to recover from the loan. This is quite bad when you expected the deal to be dusted in two short weeks.
Unlike payday loans, installment loans have better terms and you are likely to get a lender with a very flexible repayment program. Basically, the design of these loans is customer friendly and it’s not too hard on your finances.
Take consideration of your capacity to meet the loan obligations
The ability to service bad credit loans should be the first thing a lender looks at before giving you money. You should be conscious of your financial situation and base your knowledge on hard facts, not assumptions. This way, you’ll realize how much you can afford to borrow and it will be easier to spot a lender who’s trying to offer more than you can afford.
A responsible lender will be proactive and very strict in analyzing your propensity to pay what you are proposing to borrow. If a lender doesn’t do that, you’d rather not make any deals with them unless you want to be trapped in debt.
Emphasizes on soft credit checks
If a lender tells you they don’t perform any credit checks, then you are in a risky situation. Credit checks are important in determining your capacity to pay borrowed money. However, hard credit checks are not friendly and you need to stay away from lenders supporting this method. Basically, a hard credit check will sink your credit score further and it could take years to recover from that.
On the other hand, a soft credit check has no adverse effects on your financial profile. If a lender is serious about helping you, they need to demonstrate that even before you’ve taken a loan with them. A good indicator would be going soft on your credit check.
The loan offer comes with friendly and flexible terms
A selfish lender will be asking you to repay the loan in a few days’ time without the possibility of friendly adjustments. However, you should only agree to do business with lenders who can give you ample time to make the loan repayments. Basically, a loan with a long repayment period facilitates budgeting and proper financial planning.
Nation 21 as the better option
By now, you know just what to look for in a good lender and Nation 21 is all about that. With a wealth of useful experience in this industry, we are positioned to give our customers a convenient service. The intuitive online platform helps you get the best bad credit loans that match your financial needs. We also understand that a credit score is just a tiny bit of your financial story and therefore we focus on your entire financial profile.