As you may know, there are some sites out there that offer guaranteed online personal loans, regardless of credit score. While this can be quite enticing, especially if you need to borrow money quick, but have bad credit, it is not to taken lightly. There are some real problems with using sites like these. How can they offer guaranteed online personal loans to anyone, regardless of how bad their credit score is? It really doesn't make much sense, does it? It's certainly not because they are trying to help you out. It's really because they are trying to make money, and lots of it. How can you protect yourself? Is it safe to assume you can borrow money when you have a really bad credit score? What if you are already too poor to make the payments? How will you survive after you take out a guaranteed online personal loan? Here are some things to consider before you fill out the application to borrow the money.
Interest rates are determined by a number of factors. Essentially, they all boil down to the amount of risk the lender must take when they borrow you money. If you have a high credit score, you can expect a lower rate, in most cases. If you have a bad score, work on ways to improve your credit score. When you apply for guaranteed online personal loans, what should you expect? It's obvious the lender is in a high risk business. High risk lenders have high interest rates. Before you decide to sign the paperwork for any guaranteed online personal loans, you should understand what goes into determining the interest rate you pay, when you borrow money from a high risk lender.
Credit score: If you have bad credit, you will have to pay more interest. It's really just a fact of life. If you are looking at guaranteed online personal loans, then there is a good chance you have a poor credit score. You may be required to pay 40% interest or more when you use high risk lenders, and have a bad credit score. Guaranteed online personal loans are notorious for carrying a high rate of interest. It's something to consider when you borrow money with bad credit.
Collateral: Do you have collateral, or are you borrowing money on your signature? If you are borrowing money with your signature alone, while using guaranteed online personal loan lenders, you can expect to pay a very high rate of interest. If you put up collateral, often your vehicle title, you run the risk of losing your automobile to the bank if you don't make payments on time. Guaranteed online personal loans will often require some form of collateral to help offset the high risk that comes with bad credit scores.
Income: Yes, the amount of money you make impacts the interest rate you will pay when you go for guaranteed online personal loans. If you are not making much money, and are too poor to pay off your current bills, how can you take on more monthly expense? Be sure that you are capable of paying the money you borrow back. If you are late on payments, you will face stiff penalties or increased interest rates from guaranteed online personal loan providers.
Ability to pay: This is a little different than income. It really goes a step further, assessing your monthly expenses as well. The guaranteed online personal loans will carry a higher rate of interest if the high risk lender believes you will have trouble making the payments.
There are some alternative to guaranteed online personal loans that are worth exploring. If you have bad credit, and are a high risk borrower, it may make more sense to attempt to use one of the alternatives, so you don't get yourself into too much financial trouble. Guaranteed online personal loans should only be taken out as a last resort. Here are some alternatives, both long term and short term that may help you out.
Payday advance: You are going to pay a hefty fee with payday type loans. The real benefit to using them, instead of guaranteed online personal loans, is that it's a very short term process. If you know you will be okay in a couple of weeks, it's worth checking out.
Local banks: Even if you have really bad credit, the bank in your neighborhood may borrow you some money. If you have done business with them in the past, and have kept your accounts current, they may be willing to work with you. It's worth a shot. You will generally pay less at a local bank, even if you are high risk with bad credit, than you will by taking out guaranteed online personal loans.
Pawn shops: It seems many people forget about the pawn shops in their area when they look into guaranteed online personal loans. Do you have something of value to sell? If you do, it would be wise to see what you can get at a local pawnshop. You just may be able to avoid borrowing money from a high risk lender.
Your parents: Can you borrow money from your parents? What if you drew up a contract for them, and offered to pay a fair interest rate? Would they be able to help you out? It may be a better option than looking at borrowing money from high risk lenders. You could pay them less interest than the lender would charge, but more than they could get at the bank. Everybody wins, assuming you pay the money back in a timely manner.
Second jobs: I know, the economy and job market is poor. Still, if you could get a second job, working just one shift per week, eight hours long, at $8.50 per hour, you would bring home almost $300 per month. This could help you avoid the need for guaranteed online personal loans. There are plenty of side jobs for cash you could consider.
Guaranteed online personal loans are high risk. Who are they high risk for? Is it you, or the lender? Both parties assume a lot of risk. Be sure to think long and hard before you borrow the money from high risk lenders. You could actually end up worse off than you are right now. Guaranteed online personal loans are very high risk.