Types of loans for bad credit to avoid
Sometimes you may find your financial position has improved, and you get tempted to look for a loan. No matter how appealing the available loans may be, the flowing are loans for bad credit that you should avoid at all cost.
i. Car loans targeting consumer with low credit rating: If this type a loan has almost twice the normal rate for loan and repayment period is in excess of four or even five years, then know that is a loan for bad credit. The problem with such loans comes from the fact that a car depreciates at a higher rate than how the loan is being repaid. In the end, you get a bad credit score.
ii. Microcredits: These are other good examples of loans for bad credit. The rate of interest that you pay when you take them is set based on the period that you will take to repay. For example, if you take a loan of 300 dollars, you might be asked to repay 360 dollars after two weeks, which, of course, is not an informed choice of a loan.
iii. Car title loans: If next time you would not want to have your car, this is the best loan for bad credit to go for. These types of loans have very high-interest rates; it is as if they are designed to see a loaner losing the car. A person is given this loan with the condition that if there is default, the car attached should be forfeited to the lenders.
iv. Loans designed for people with bad credit: This is the final type of loan for bad credit covered by this article. Subprime lenders who examine not the credit worth of the borrower but look at the ability to pay offer them. Their aim is to maximize profit by charging a high-profit margin on the loans.
Now you have it. The above are good examples of loans for bad credit that you should not go for they tend to lower your credit rating in the long run.Taking a loan requires the person taking to consider the long term effects the loan will have on his/her overall credit rating and credit worthness. Going for a loan should not be any person priority if there is no inherent need for one.
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