Bad credit loans are one of the best (and only) alternatives for people with poor payment records to have access to funds fast in case of unexpected expenses. If you have bad credit and are looking forward to apply for a loan though, you can make the approval process faster and even gain some added perks if you have some assets of value.
These are known as “secured” bad credit loans, which have their sets of similarities and differences when compared to traditional or “unsecured” bad credit loans. That said, here is a better look at these two main types of bad credit loans.
Unsecured Bad Credit Loans
This is the most popular type of bad credit loan. When unsecured, bad credit loans do not require you to pledge any kind of valuable object or asset to the lending company. This type of loan is not only more popular among people with poor payment history due to the fact we just mentioned, it is also very popular among lenders and even some banks. The reason for this is that unsecured loans appeal to more potential customers, which in turn allows lending companies to widen their market and clientele to people with poor payment history who don’t own any valuable assets but who have a job or other source of income.
Naturally, by granting bad credit loans without any safeguard from the customer, lending companies face a greater risk of losing the amount granted. As a result, lenders offering unsecured bad credit loans offer usually no more than just a few hundred dollars. Even more, in order to protect themselves, lenders require increasingly more strict terms to grant them.
Secured Bad Credit Loans
Contrary to their unsecured counterparts, secured bad credit loans are granted by lenders only after a collateral is pledged that has a value that is at least close to the amount you are applying for. This allows lending companies to have an asset of value that they can use in the event that the bad credit loan is not repaid in full. The funds are released only after you transfer possession of your valuable to the bank or lender.
It is also worth mentioning that offering an asset to secure your bad credit loan can give you quite a few additional benefits, namely:
• You will qualify for your loan much faster.
• Both the terms and the interest rate you are offered will be far more advantageous.
• You will benefit from longer periods to repay.
• Bigger loan amounts.
A word of warning though: Secured loans need to be repaid in a timely manner. Otherwise, the lending company might seize your pledged asset.
There you go. If you have bad credit and are in urgent need of cash, a bad credit loan is definitely what you are looking for. If you have a valuable asset though, you can get your money even faster and with better terms if you stick to your bad credit loan repayment schedule.
Fell free to browse from the lender above to see if you find one that offers a deal you might like.