Home Finance 5 Types of Online Loans for Borrowers with Bad Credit

5 Types of Online Loans for Borrowers with Bad Credit

by Paresh Bramhane
5 Types of Online Loans for Borrowers with Bad Credit

The popularity of online loans isn’t that surprising. Borrowers nowadays want convenience, and online loans make it easy for people to get a loan with its fast and simple application process. In contrast to traditional loans, borrowers can apply for an online loan through a smartphone or computer with an internet connection. 

Besides convenience, many online lending companies provide an opportunity for folks with bad credit to borrow money. Online lenders like worldpaydayloan.com aren’t too finicky about credit scores. Most of the time, they will only check your capacity to pay back the loan through your monthly income. 

If you’re having bad credit problems and need to borrow money, pick one of these types of online loans below. 

Online Payday Loans

Not all people will consider payday loans as a good loan option. With all the bad publicity surrounding this type of loan, there are probably some folks who wouldn’t want to hear a thing said about it. 

But let me make a case for payday loans online for a moment. 

Yes, some of the negative information you hear or read about payday loans is true. Some payday lenders charge exorbitant rates on their loan products, and this throws borrowers into a bad debt cycle. However, not all payday lenders do this. 

You can find online lenders that follow good payday lending practices. After all, payday loans are now regulated by many states to protect consumers. For example, lenders are not allowed to lend more than a $1,000 loan amount. The annual percentage rates should also not go beyond the 36% APR limit. 

Although it’s more expensive compared to other types of loans, many borrowers choose payday loans because these loans have lenient credit requirements. You just have to be aware of those predatory lenders that spurn the regulations imposed by the government. 

Peer-to-Peer Loans (P2P)

Peer-to-peer or P2P loans are also a popular option for borrowers with poor credit scores. Through a P2P network, you can borrow money directly from individuals without the middleman. It means lenders have the leeway to provide loans to borrowers without the stringent requirements you usually find in traditional lending.

Another great thing with P2P lending is that you have the chance to get a loan with an affordable interest rate. You can browse the internet now for websites that operate P2P lending. 

Online Personal Loans

Banks offer personal loans, so it’s not a new type of financing. But now you can obtain personal loans from online lending firms. 

An online personal loan is typically used for debt consolidation, financing a car repair, or any other type of purchase. When it comes to paying back the loan, you have to pay a fixed payment to the lender monthly, which is an advantage on your part because you know how much you’re going to pay and it allows you to budget your money. 

Nowadays, some online lenders offer personal loans with affordable interest rates. But the catch is that you have to be aware of ancillary fees, such as origination fees when getting this type of loan. 

And, yes, it’s possible to avail of online personal loans even when you have bad credit. Many online lenders also now cater to people with bad credit as long as the borrower has a regular monthly income. So, you better check out the world wide web now for online lenders that offer personal loans for a bad credit borrower like you. 

Small Business Loans Online

If you’re planning to build a business and lack the funds to realize your plan, you can look for small business loans online. 

In contrast to small business loans offered by traditional banks, online lenders can allow you to get financing for your business even with no or bad credit history. If you have a promising business, you can even get a higher loan amount to start running it. 

Guarantor Loans

Another alternative to folks with bad credit who want to borrow some cash is guarantor loans. For you to obtain this kind of loan, you need to look for a guarantor with good credit. That’s the negative side of this loan since it’s not easy to convince people to be a guarantor for a loan. It’s recommended to ask your relatives, friends, or people close to you to be your guarantor. 

Takeaway

Borrowing money with a poor credit score is indeed difficult. Traditional banks and credit unions won’t let you do that because of their strict credit requirements. But, with online lenders, it’s possible to obtain financing even when you have bad credit. 

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