If you have bad credit, you are far from alone. Approximately 1/3 of all Americans have a poor credit score–or in some cases, no credit score at all.
Bad credit doesn’t just look bad when you open your credit card statement. It can prevent you from taking out mortgages and loans, leaving you with few options for providers that trust you. Most of all, you may feel that you have lost the convenience of online loans.
But what if we told you there are online loans for bad credit? That’s right, you can find loans in Missouri regardless of your economic situation. And despite what you may be thinking, there are options that won’t tank your finances in the process.
Keep reading as we discuss your options for a bad credit loan online.
What Is a Bad Credit Score?
Before you start to look into a bad credit loan, how do you know when you have bad credit? Surprisingly, the line between good and bad credit is up for debate. Some say that you have bad credit once you drop below about 670.
However, others would argue that your credit isn’t truly bad until you hit about 580. From 580 to 670, you are in a fair range where you still have some options for decent loans.
Below 580, you are in the danger zone. Many institutions may not issue loans, credit cards, mortgages, and other financial benefits to you. It’s at this point when you may be in need of online loans for bad credit.
Bad credit depends from institution to institution. Some organizations see 670 as a hard limit for bad credit. Others may be far more forgiving, only viewing it as bad credit once you drop below 580.
Let’s discuss a few of the options available if you have reached 580 or below–or in some cases, 670 or below.
Online Loans for Bad Credit: Title Loans
Title loans can be a lifesaver in a very difficult situation. To be clear, these are loans that you only want to take out when you have no other recourse. If you still have some financial headroom or other options, you should consider those first.
Plain and simple, a title loan is when you use collateral to take out a large loan on short notice. Typically, you hand over the title to your vehicle as collateral to receive the loan. Once you pass over the title, the credit provider issuing the loan will send you the money right away in a lump sum.
You can get these loans very fast, with few questions asked. They will not even perform a credit check in many situations.
Value of a Title Loan
Title loans can range from small to midsize. You won’t be able to take out $100,000 with a title loan, so you will need to look at other options in that case. On average, people can expect to receive between $100 and $10,000 with a title loan.
Understand that title loans are meant to be a form of quick cash. These loans work best if you are in a desperate situation where you need money immediately for something very important.
These are not your average loan to handle everyday costs and payments. If you need help with preowned auto financing, then you should search elsewhere.
Requirements to Obtain Car Title Loans in Springfield
While they will not perform a credit check and won’t require a certain credit score, title loans do have some requirements. Primarily, you will need to provide proof of vehicle ownership and insurance.
The amount of money that you need to take out will also be a factor here. Typically, this sort of loan should only be about a quarter of the car’s total worth. If you need a lot more money than that, you may need to find another loan option.
You can also have different types of vehicles, not necessarily just a car. A truck or motorcycle may also be sufficient collateral. This will depend on the value of the vehicle more than the vehicle itself.
One note here: you need to have full ownership of your vehicle. If you have a significant loan repayment still due, your loan provider may deny your application. If you have mostly paid off the vehicle, then there’s a good chance the provider will accept your application.
Length of a Title Loan
Another feature of title loans is that they do not last very long. If you are looking for a loan that will give you several months or years to pay it off, look elsewhere. According to the FTC, most title loans give you about 15 to 30 days to pay them off.
This is where the collateral part comes in. If you fail to pay off the principle of the loan, then the issuing company has the right to claim your vehicle.
It goes without saying that you should carefully consider this loan. If you cannot afford it, you may lose your vehicle for good.
Interest Rate for Title Loans
Interest rates on title loans are very high compared to other types of loans. Car title loans regularly have between 260% and 300% APR, in some cases all the way up to 1,000% APR. The average APR for a credit card, by comparison, is about 21%.
This is a very high APR, which is why title loans only last between 15 and 30 days. It would be financially unfeasible to pay off a title loan over the course of years. The longest title loans only last between three to six months.
Before you take out a title loan, you do need a battle plan on how you will pay it off. You could lose your vehicle, which could set you back even worse than you were before. Take caution, analyze your finances, and then pull the trigger if you are ready.
Options to Be on the Lookout for
If you do decide that you should apply for a title loan, then consider finding one that is least painful. Some issuers will have added guarantees and options to protect you financially. Be on the lookout for the following:
- 0% fees: avoid any loan issuers that charge you additional fees on top of the loan APR interest
- Damage to your credit score: avoid issuers that do a hard pull on your credit score, which can damage it even further
- Low-interest rates: even though title loans have very high-interest rates on average, shop around for ones that are lower than the market average
- Loan amount tailored to your needs: only take out as much as you need, and avoid loan providers that force you to take a larger sum that you don’t
- Human customer service: you want to be sure that you can speak to a person if you have questions or concerns about your loan
Personal Loans
If you need a smaller amount of money over a longer period of time, you should consider personal loans. Unlike title loans, these are not loans that you take out on a whim when you are desperate. Rather, these are loans that help you meet your needs over a longer period of time.
Value of a Personal Loan
The value of a personal loan can still be as large as some of the largest title loans. The difference is that the loan is spread out over a longer period of time. Rather than receiving, say, $10,000 in a lump sum, you receive it in portions.
Requirements to Obtain a Personal Loan
The requirements for a personal loan vary greatly from person to person. In most cases, they will require a check on your credit score. Even though this is a bad credit loan, you will have to be at or above a certain threshold.
Some credit institutions will determine your eligibility by your debt-to-income ratio. If you have a large debt-to-income ratio, it may be more difficult to get a personal loan. In that case, you might have to resort to a title loan.
Collateral may be an option depending on the provider. Like with a title loan, you may be able to use your vehicle as collateral. In extreme cases, they may accept a savings account or a home as collateral too.
Length of a Personal Loan
As mentioned earlier, a personal loan has a much more generous period to pay it off. Generally speaking, a personal loan on the lower end may last 12 months. On the high end, you may have up to 60 months.
However, keep in mind here that you want to pay it off sooner than later. While interest rates are not as high as title loans, they are still much higher than other loan types. The longer the length of your loan period, the more it will cost you in the long run.
Interest Rates for Personal Loans
Thankfully, the interest rate on a personal loan is not even close to those on a title loan. While a title loan could be upwards of 300%, personal loans hover between 14 and 27%.
Granted, this is much higher than the interest rate on a loan with good credit. But, it does provide you more leeway than title loans. There is far less risk of losing your collateral since you have a longer period to pay it off.
Options to Be on the Lookout for
Your loan provider may also give you options with a personal loan. Don’t just accept the first one that they offer to you. Look for ones that have benefits such as the following:
- Leeway and flexibility: breathing room in the event you need to extend the loan period
- Lack of fees: avoid any personal loans that tack on a bunch of fees on top of your high-interest rate and collateral
- The human touch: people in need of a personal loan are struggling financially, so find institutions that understand that and help you where they can.
- A wide variety of financing options: you want a loan that is catered to your specific needs
- Flexible loan amounts: only accept loans that are within your budget, and avoid loans that are more money than you need
Other Tips When Looking for Bad Credit Loans
Now that you know what loans you have at your disposal, here are some additional tips for your search. Take caution. There are many loan providers out there who are not quite so moral.
- Avoid any deals that seem too good to be true, because they likely are
- Avoid loan providers that seem to be working under the table and do not have proper licensing
- Don’t be afraid to shop around for better loans and loan options
- Carefully weigh your financing and be sure that you can pay off the loan in time
- Do your research; a quick Google search online may reveal important information about a loan provider
- Speak to a representative about all of your options before accepting a loan
- Read the fine print, since this is where some loan providers may hide sneaky exceptions
- If you notice anything suspicious, report it to the Federal Trade Commission
Take Out a Loan With Quickloans
Once you have bad credit, it may seem like you have no options left for taking out a loan. Fortunately, there are online loans for bad credit that won’t run you into the ground with debt. Title loans and personal loans are the two most common types, but make sure that you know everything about them before you accept one.
QuickLoans is your source for title loans and personal loans–ones that you can get quickly. Looking for additional options? Contact us here and we’ll be glad to find a loan that works for you.