Bad credit should not hinder a person from getting a loan
This is because there are several financial institutions that are willing to advance loans to individuals despite their bad credit. Normally normal financial institutions like banks will not give cash to an individual who has a bad credit history.
Banks may even refuse to accept the security offered by a person for a loan if the person has a bad credit record.
Several options are at the disposal of those with bad credit. Below is a detailed description of three most reliable options that a person with a bad credit may opt for when in need of a loan.
Title loan institutions
Perhaps a person owns property like vehicles. Ownership of such items are a sure way to obtaining a loan if the vehicle has a clear title. All a person needs to do is to provide his/her details by filling a form that is provided by the title loan company. Other information that may be required includes details of references. The loan is effected by placing a new lien of the vehicle on the company.
It is important to remember that with this type of arrangement, the value of the loan is determined by such factors like:
The distance that has been covered by the vehicle since it was manufactured.
The general condition of the vehicle.
Those who wish to take loans from these institutions should be forewarned that failure to repay the loan would lead to automatic transfer of ownership of the vehicle by the company.
Pay day loans
Employees need not to worry of bad credit if they can obtain payday loans from their employers. Depending on the arrangements of the employers, the employees will have the benefit of obtaining loans from the companies they work with up to specified limits.
Initially pawnshops were known to be the best alternative to low income earners. Nowadays, with as a result of poor economic conditions in most countries, all people find pawnshops very helpful in times of shortages of money. Even those whom we think to be financially okay will at one time seek financial assistance from pawnshop operators.
Pawnshops are institutions that accept valuables like jewelry, electronics, gun and other valuables as security for an advanced loan. The fair value of the item that is given as security will be the basis for calculating the value of the loan to be advanced. One thing to note about the kind of loans forwarded by pawnshops is that they are short term in nature. There repayment periods normally vary between 30 to 90 days.
For the amount to be advanced to be established, the item i.e. the security is discounted so that the market value is obtained. A percentage of the discounted value is given out as loan. A loan that is equivalent to the discounted value cannot be given out.
Generally, loan obtained from such institutions carry with them high interest rates and therefore there are expensive.