Where to Get a Low Interest Loan with Bad Credit
Borrow Money with a Secured Loan or Tenant Loan
Jul 12, 2009
Missed or late payments on credit agreements mean that it will be more difficult to borrow money. This is because adverse entries will be registered with all leading credit reference agencies. However, it is still possible to get a bad credit, low interest loan. Bother tenant loans and secured loans are available to those who wish to borrow money.
Where to Get a Bad Credit, Low Interest Loan
- Homeowners with sufficient equity available may be able to get a secured loan.
- A tenant loan may also be available from a Credit Union for non-homeowners.
Pawnbroker or Payday loans are further possibilities, although the rate of APR will reflect the risk of default posed to the lender. However, they remain useful ways to borrow money for those with a bad credit rating.
Credit Union Loans
A Credit Union is established on the basis of a common interest, such as work or locality. Low interest loans are available to bad credit customers as they operate solely for the interests of their members, not profit. The maximum APR on a Credit Union loan is 26.8%, but rates tend to be considerably lower. Although the maximum amount that can be borrowed is less, the APR on a tenant loan is often as favourable as on a secured loan.
It is possible to repay a Credit Union loan at any time without penalty. Many Credit Unions offer members a loan interest rebate should a funds surplus exist at the end of the financial year. This is by far the best low interest loan for tenants who have a bad credit rating.
Secured Loans
A secured loan involves borrowing money against the equity in the property. Equity is defined as the difference between the value of a home and the loans secured on it. The provision of collateral means that a low interest loan can be taken out, even with a bad credit rating. Whilst the typical rate of APR on a Payday loan is well over 1000%, most secured loans are available at 12-16% APR. The term of the loan can be extended to spread the cost of repayment; this means that monthly repayments are more affordable than the majority of tenant loans.
Should the borrower default on the credit agreement, the property can be repossessed and sold on the open market to recover any money lent. In the event of financial difficulties, talk to the lender to see if they are able to provide help and assistance. Possibilities include switching from a repayment to interest-only loan to reduce repayments or requesting a 3 to 6 month payment holiday.
A bad credit, secured loan is generally the cheapest way to borrow money because of the provision of collateral. This means a lower rate of APR and the ability to spread monthly repayments over an extended term. A Credit Union loan, also known as a tenant loan, is a useful way to borrow money for those who don't own a property. It is particularly useful for borrowing small sums on affordable terms.
Sources
Disclaimer: This article in no way attempts to give legal or tax advice. One should consult a licensed attorney, tax advisor, or other qualified professional.
 |
 |
 |
