How to Obtain Bad Credit Personal
For someone needing some quick cash for
any need, a signature loan is one option of borrowing
the money. A signature loan is basically another term
for an unsecured personal loan, in that a person's signature
is their word that they will pay the money back, instead
of the loan being backed by an asset such as a house
As the loan is unsecured, the interest rate is usually
higher than that of a secured loan such as a mortgage
or a home equity loan. It is also generally harder to
qualify for a loan of this type, because the bank or
credit union has to be doubly sure that the borrower
has the means and the inclination to pay the money back,
as it has no quick recourse to get the money back should
there be a default on the loan. With a secured loan,
the lending institution can always just seize the collateral
and sell it to recoup the funds if need be, but this
option is not available with an unsecured loan.
For this reason people with bad credit often have a
hard time getting personal signature loans, but this
option is not completely out of the question for them.
Bad credit personal signature loans will usually carry
a higher interest rate than loans for people with good
credit, as this extra interest that the banks earn acts
as an insurance policy against the higher default rate
of borrowers with bad credit.
As the loans are unsecured, they will usually be issued
in smaller amounts than mortgages, with the upper limit
typically set at $20,000. People can use the funds from
personal signature loans for all sorts of reasons, but
the typical uses are for debt consolidation, home repairs
or improvement, or unexpected expenses such as medical
bills or auto repair. The payment terms for personal
signature loans can vary, but the typical loan of this
type is carried from two to five years.
Another option that many banks and credit unions offer
is a signature line of credit. This type of loan is
a never ending loan that stays open even when it's paid
off. That way, the borrower always has access to the
funds in case of emergency, or if he needs them for
another reason such as a home improvement or a vacation.
Usually, special checks are issued to the borrower,
who can write them out just as if they were on funds
deposited in a checking account. When the checks clear
the bank, the amounts are added to the balance of the
loan, which is then paid on by the borrower.
So, for people who are in need of some additional money,
but either rent their residence or don't have enough
equity in their house to qualify for a home equity loan,
signature loans are available from banks and credit
unions. Even for people with shaky credit, bad credit
personal signature loans are there for when they get
into a jam that only an additional source of funds will
get them out.