Bad Credit Loans

May 7th 2016


When you have bad credit, almost all banks or credit unions will not allow you to get a loan. The bad credit loan, however, can help people who are currently in a situation of bankruptcy, foreclosure, or other credit-challenged circumstances. When you have a poor credit rating, you are considered a risk for banks and credit unions. When people with a poor credit history need money, the only type of loan they may be able to get is the bad credit loan, which charges very high interest rates.

How It Works

There are many different ways you can acquire bad credit loans. People who need this loan can search online for companies that give bad credit loans. You can get a payday loan, where you postdate a check for usually no more than two weeks. The check covers the amount of the loan plus interest. Usually, the basic requirement is that you have some kind of income.

There are two types of bad credit loans: secured and unsecured. Secured bad credit loans can be taken up if you offer a vehicle or some other valuable property as collateral for the loan. If you do not repay the loan properly, the company seizes the collaterated car or the property. On the other hand, unsecured bad credit loans do not require any collateral, but the interest rates are higher than the secured bad credit loans.

Some companies offer bad credit loans without either of these prerequisites. You are required to show one or two recent check stubs to show you have an income that is over and above their lowest allowed amount. You are required to sign your name, report your current financial status, and assure them of regular repayment.


If you need cash quickly, bad credit loans, like payday loans or title loans, can provide you with cash the same day you apply for it. This can help you pay bills and prevent worsening your situation. It will also save you late fees on your payments or NSF fees from bounced checks. People with bad credit can get money from friends and relatives who may charge a lower rate of interest. However, the person must make sure that he repays the amount quickly.


Most bad credit loans charge up to 30% interest, or more accurately, they have an annual percentage rate (APR) in the range of 500% to 600%. This is higher than you would ever pay on a traditional loan or even a credit card balance. For the convenience of being loaned the money quickly without a credit check, the interest is often worth it. Bad credit loan companies charge high interest to offset those loans that default. The better the credit history, the lower the interest rates are. So, a person with a bad credit history will have to pay a higher interest rate as compared to another person whose credit history is much better.


For short-term loans like payday loans, you must figure out if the amount you will save in the late payment and NSF fees is worth the interest you will pay on a two-week loan. For longer loans, read the fine print because you could be paying several times the amount of the loan in interest.


There are a number of financial companies offering loans for people with bad credit. Payday loan companies, title loan companies, and small same-day loan companies all offer bad credit loans, as do many companies now online. Zimbio and Credit Loan is a couple of companies that offer bad credit loans.

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