Types Of Small Loans

Borrowing even a small amount of money with bad credit presents a number of challenges. Typically, the largest challenge that you will face is finding a lender who is willing to work with people who have black marks on their credit reports. That doesn’t mean that all hope is lost. There are a number of different types of small loans for people with bad credit. Here is a closer look at some of the options that are available:

1. Traditional loans. Depending on how bad your credit is, you may be able to qualify for a loan with a traditional lender. This is particularly true if you bank at a local bank or credit union. These smaller institutions often work with people with bad credit. The only thing to keep in mind with these loans is that you will probably have to pay a relatively high interest rate and you may have to jump through more hoops than usual in terms of documenting your income, assets, and expenses.

Types Of Small Loans

2. Payday loans. These short-term loans are primarily meant to be used to cover emergency expenses that have to be taken care of before payday. Typically, you can borrow up to $1,000 from payday lenders, depending on where you live, how much money you make at your job and the lender’s policies. Just remember that these loans need to be paid back extremely quickly. Additionally, they are not very friendly for borrowers due to the fact that they usually have excessive interest rates and fees attached to them.

3. Title loans. Another option for a small, short-term loan is to put the title of your car up as collateral with a title lending company. In essence, this allows you to borrow money against the value of your vehicle. If you default on the loan, the company that gave you the money can repossess your vehicle. Because of that, these loans need to be used with extreme caution.

These are some of the different types of small loans for people with bad credit that are out there.