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The Truth About Adverse Credit Loans

By Edited Sep 9, 2015 0 0

Adverse credit loans are loans for individuals with poor credit. Although there is a lot of hype surrounding these loans, the truth is they are quite difficult to receive. Many lenders won't risk lending money unless the applicant has good to excellent credit. The only exception is if collateral is offered, such as a home or automobile, or a person to co-sign and take the fault if the applicant doesn't pay. In many cases, people with adverse credit problems won't have this type of collateral to begin with, much less someone willing to vouch for them. In this article, we'll examine the truth about adverse credit loans - the good, the bad and the ugly.

Do Adverse Credit Loans Really Exist?

In theory, adverse credit loans do exist, but in practice, they are few and far between. With collateral or a co-signer, an individual with bad credit can usually secure a small bank loan with a high interest rate, although this may not even be enough in some cases. Without either of these, the chances of finding a lender willing to help are significantly lower, and some may even say impossible.

However, there are a few ways a person can secure an adverse credit loan if they are in desperate need. These are usually high interest pay day loans, and may not be the best option, even for the short term. The best choice is always to repair or rebuild your credit, which takes time, patience and hard work. Once your credit score is high enough, you can get a traditional loan with reasonable interest rates for just about anything you desire.

What Types of Adverse Credit Loans are Available?

Aside from bank loans secured with collateral or a co-signer, there are a few more ways a person with bad credit can get a fast loan. Keep in mind that there are significant disadvantages to these types of loans and the lender often profits more from interest fees and closing costs than the loan is really worth. If you're in a desperate situation, however, try one of these methods for getting adverse credit loans:

  • Pay Day Loans - If you receive a weekly paycheck, there are numerous websites and physical companies willing to lend you money against your next check. However, interest rates are outrageously high and it's often hard for the borrower to repay the loan. Payday loans are essentially adverse credit loans because anyone can receive such a loan with proof of income, regardless of credit score. Make sure to thoroughly research and compare offers before agreeing to one of these loans. Understand the terms and make sure you can handle them.
  • Credit Card Cash Advance - If you have bad credit, but you also have a credit card, many companies will allow you to take a cash advance. This type of adverse credit loan will often come with higher than normal APR, but they are available in a pinch. Make sure to check with your credit card issuer for specific details on interest rates and fees before deciding on a credit card cash advance.
  • Pawnshop Loans - This may be one of the easiest adverse credit loans to receive. If you have merchandise of value such as jewelry or electronics, you can pawn it to a local pawnbroker. In most cases, the amount of money you receive will be much less than the items are truly worth and you'll be required to pay back the loan within a specified amount of time or lose the merchandise for good.

Final Thoughts on Adverse Credit Loans

As you can see, it is possible to get adverse credit loans, even without any type of collateral, but you must be willing to accept disadvantageous terms to receive the funds. Overall, it's best to try and repair your credit and apply for a real bank loan instead of paying excessive interest rates for a short-term solution.


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