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Small Loans Bad Credit - How to Get Small Loans with Bad Credit

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As many young adults, and even some older adults, are discovering, your personal credit score is extremely important. Without good credit, even simple banking and financing options will be closed to you. Receiving any kind of loan, big or small, depends largely on having good credit. Without good credit, the risk you pose to the lender is too high, as you have no past records to prove your trustworthiness and ability to pay back the loan. This, however, does not mean it is impossible to get small loans with bad credit. Several other factors can be taken into consideration besides your credit.

The first thing you will want to do when seeking a small loan with bad credit is to identify and understand why you need a loan. All other options other than getting a loan must first be considered. A loan is not free money. It will have to be paid back. You must have a source of stable and secure income well beyond your monthly expenses. If you do not have a stable income, consider how you plan on paying back the loan. If you do have a stable income over and above your expenses, is there a reason why you cannot save up the money until you have what you want to borrow?

After deciding that a small loan is the only possible solution, you will have to seek out a lender. This is usually a bank, but many specialized lenders are also available. You must first use one of these primary sources of small loans to determine whether or not you qualify for a small loan with bad credit. Many people mistakenly believe their credit is worse than it really is. In lieu of actually applying for a loan, you can seek counseling from a financial advisor. The difference is that applying for a loan is usually free, but you will have to pay for the services of a financial advisor. When you apply for the loan, be sure to bring with you evidence of income, assets, and expenses. You will also need two forms of ID and your Social Security number.

If you are denied for the small loan because of bad credit, there are still some options available. It is not always necessary to have perfect credit, if you can provide something to the bank of value that will give them assurance that you will repay the loan. This is called collateral. The best collateral is your home. If you own your home or have equity built-up through your mortgage, many banks will be eager to give you a small loan with bad credit. This is because if you do not pay back the loan, they will seize your property. If you do not have a house, other assets can sometimes be accepted as collateral, including cars, jewelry, or other items over the value of the loan you wish to secure.

If you have no collateral, it is still possible to get a small loan with bad credit. You can get a small loan from a payday advance lender. You will need a steady income and a checking account. The lender will give you a loan from $100 to $1,000, depending on your income, for a term of up to two weeks. If you do not pay back the loan, they will deduct the payment by cashing a check that you must give them as assurance. The problem with these types of loans is that they have an extremely high interest rate. The APR on payday loans can be as high as 1,000 percent. These types of small loans for bad credit are only recommended in dire emergencies.

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