Bad Credit Loan Companies Offer Some People A Second Chance
Sometimes even people who have had financial trouble in the past need a helping hand and there are bad credit loan companies will to step up and take a chance. Understand, they are not doing this out of the goodness of their heart and the borrower will pay dearly for the chance to reestablish their credit history. Depending on your credit history and whether or not you have filed for bankruptcy will play into how favorable your application is viewed.
Filing for bankruptcy is typically not a plus on a loan application, especially if the bankruptcy has not yet been finalized. Even bad credit loan companies will not loan money to someone who still has time to place their name of the list of creditors going into bankruptcy court. However, about six months after the bankruptcy, if any attempt has been made to reestablish credit, many bad credit loan companies may be willing to offer up a loan.
Do not expect bad credit loan companies to offer any savings on interest rates as typically their rates are going to be at or near the highest rate allowed by the law of the state in which you live. If it is lower, there will be a stipulation in the agreement that if you miss a payment, in addition to late fees, the interest rate will go up, usually to just under 30 percent.
Short Term Loans May Not Be Answer
There are many companies offering so-called payday loans that do not conduct the usual credit check, usually personal references are required so they can find you if you default on a loan, but overall the high rate of interest along with loan origination fees is pretty steep to begin with. These companies are not the same as bad credit pesronal loans companies, as they are essentially cashing a post-dated check, giving you the cash in exchange for a check, with an amount including the interest and fees, which they will cash on the next payday.
Many of the bad credit loan companies also do not conduct a thorough credit check, usually just a call to the credit bureau with which the work the closest, and once they get your credit score, they use a predetermined formula to calculate your interest rate. With many people just getting back on their feet, they are willing to pay the extra just to prove they can handle credit responsibly.