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Loans options for people with poor credit

Bad credit loans are designed for borrowers with a less-than-perfect credit score. While most companies advertise loans for applicants with a poor credit score, few have convenient terms for their customers. Consequently, clients pay high-interest rates and fees in exchange for the privilege of accessing a bad credit loan. In other words, signing a contract for these loans is often a financial risk, more detrimental than beneficial to the borrower. To avoid overpaying, consider all the options you have before deciding on your best choice.

  1. Payday loans. An applicant with no credit history or a poor score will find it easy to qualify for a cash advance. Direct lenders perform little to no credit checks, and they typically transfer the funds in one business day. A payday loan allows customers to apply for cash advances of up to $1,000, depending on the state and lender. The repayment term can be up to one month. You will usually have to pay off your debt on your next payday. Payday loans are banned in some states on account of high-interest rates.
  2. Payday alternative loans (PALs). Some credit unions offer payday alternative loans for their members, provided that applicants meet the requirements. The interest rate on PALs is usually capped at 28%. Terms span from one month to a year for amounts up to $2,000.
  3. Pawn shop loans are a quick way to borrow money by using a valuable object as collateral. Terms vary depending on state laws. If you cannot pay off your loan on the due date, the pawn shop can sell your valuable item to get their money back.
  4. Personal loans from direct lenders. Potential borrowers may apply for an unsecured personal loan from online lenders. The amounts one can access are up to $5,000, and the requirements are similar to payday loans. Loan approval may take a few minutes on business days, and the money is deposited as soon as the customer signs the loan agreement. The repayment terms span over several months. Borrowers thus repay their debt as a regular monthly payment.
  5. Title loans. A customer can borrow money against the title of their vehicle. Title loans offer a quick way to finance your short-term emergency. If you don't pay off the loan on time, your lender becomes the legal owner of your car.

Synergy Financial Group provides personal finance services to all interested parties. Should you have any questions, don’t hesitate to contact us.