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Find Out About Unsecured Bad Credit Personal Loans

For someone with bad credit, life can be very difficult at times when dealing with finances. All of the things that most middle class families take for granted become difficulties that have to be overcome. The process of buying a car can be a nightmare, as it can be very difficult for a person with bad credit to find financing for a vehicle at a reasonable interest rate. He often has to go around to many different banks or credit unions and attempt to convince them that he is creditworthy enough to be able to pay the loan back. Likewise, buying a house can be even more difficult, since a much greater amount of money is on the table with a mortgage. So imagine what life must be like when an emergency infusion of cash is needed, and an unsecured loan is desired.

There are usually only three options for borrowers that are looking for an unsecured bad credit personal loan. The first, a personal loan from the borrower's local bank, requires good credit or a cosigner who will guarantee the loan in case of default. This is usually not an option for a person with bad credit, depending on how bad it really is. Most banks won't even talk to someone with bad credit, as they have to protect their assets from people who are more likely to default on the loan.

The second option is to get a cash advance from the borrower's credit card. This can be a good option if the person actually owns a credit card, but often someone with bad credit will either not have a card, or it will be maxed out to the point that it won't do any good. The other problem with this route is that the interest rates for cash advances from credit card issuers are usually in the stratosphere, sometimes at double or even triple the normal interest rate for purchases. And of course, these advances are added to the end of the balance, so that the lower interest rate funds are always paid down first before the cash advance is paid on, providing the credit card company with even more interest.

The third option is to apply for a payday loan, which can be a very good way to get some quick emergency cash. With a payday loan, the person's next paycheck acts as the collateral, provided the borrower has a steady job. These loans are strictly for people who are in a jam, either caught between paychecks with no money, or for those who are up against some unforeseen expenses. The amount that a person can borrow is not a huge amount of money, but it's often enough to tide the person over until he/she can get paid again in a week or two. As the interest rate on this loan type can be rather high, it is not recommended to use this source of funds all the time, but it can be a lifesaver in the event of an emergency.

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