Credit scores are designed to tell lenders how much of a risk they’re taking when they loan money to an individual. Which is why it can be more difficult to obtain a personal loan in Utah if you have bad credit.
If you’re thinking about getting a loan in Utah and have bad credit, it’s okay! There is still hope for you to get the finances you are looking for. But before we talk about what you can do to get a loan with bad credit, you should first understand how loan terms work. We’ll take you through some basics about how personal loan terms work so you’ll be able to compare options and understand the terms of your loan when you’re ready to take it out.
- Loan APR: APR is the annual percentage rate of the personal loan and is the total cost you pay each year to borrow whatever amount of money you took out on your loan. This includes the interest of the loan and any added fees. A lower APR means that you’ll pay fewer fees and the loan will cost you less overall. A personal loan for someone with bad credit will likely have a higher APR.
- Loan minimum and maximum amounts: Lenders often establish minimum and maximum amounts they’re willing to lend. If they aren’t willing to offer the amount you need, then they’re probably not the right fit for you. Don’t think that you have to borrow more than you actually need.
- Loan repayment periods: The loan repayment period is the amount of time you have to repay the loan. The longer the repayment period, the more the loan will cost you overall. If you can manage to pay off the loan in a shorter period it will generally cost you less.
- Monthly payments: Monthly payments are usually set by the lender and include fixed dates for each payment. You’ll also find loans that must be paid off weekly or biweekly.
Additionally, you should understand that credit scores are designed to tell lenders how much of a risk they’re taking on when they loan money to an individual. This explains why it can be more difficult to obtain a loan when you need one if you have bad credit or why your options are more limited.
However, if you have bad credit, it’s not impossible to find a loan option that works for you. There are several routes you can take to get a loan in Utah even if your credit score isn’t as high as you (or the bank) would like it to be.
1. Get a Cosigner
Do you have a close family member or friend with good credit who trusts you? He or she may be able to help you get the funds you need without being the one to loan you the money.
Many lenders are more willing to give personal loans to someone with bad credit if someone with a good credit score is willing to cosign the loan. A cosigner commits to being responsible to pay the loan if the borrower is unable to do so. This significantly lowers the risk for the lender.
You can ask anyone to be a cosigner, but it’s smart to start with close relatives or friends who are familiar with you and your situation. Remember, when you ask someone to be your cosigner, you’re asking them to take on risk, so be prepared for the possibility of them saying no.
2. Look into Secured Loan Options
Another option when you have bad credit and need a loan in Utah is to apply for secured loans. In a secured loan, the borrower provides some form of collateral that they must surrender to the lender if they are unable to pay back the loan. It’s often easier to obtain a secured loan, even when your credit score isn’t amazing, because the lender’s risk is mitigated by the offered collateral. However, if you fail to pay back the loan you will forfeit the collateral to offset the lender’s loss.
Common examples of collateral used in secured loans include home equity, vehicles, and investments. Other specific loan types include personal loans or short-term loans (also called payday loans). Personal loans are most helpful if you have unforeseen expenses as they will be less expensive than a credit card or payday loan, or if you are paying off debt from a high-interest credit card as you could save money in the long run. If you’re in need of immediate funds of small amounts, short-term loans will give you instant access when you’re in a bind. However, they can ultimately end up costing you more money due to extremely high APR and other fees. If you know you’ll be able to pay it off right away, a short-term loan can work for you; otherwise, it’s best to use caution when taking one out, and only when absolutely necessary.
3. Borrow from Family and Friends
Asking for money from a family member or friend may sound like a bad idea, but it doesn’t have to be. Your friends and family may be able to understand your circumstances better and overlook your poor credit score.
If you do borrow from a family member or friend, make sure you still treat it as an official legal agreement. Write down in clear terms the agreement including the amount, the lending period, and any other terms you agree to when taking out the loan.
4. Join a Credit Union
Credit unions can be a good choice when looking for a lender in Utah. Credit unions are usually community-based because they are owned by members. For this reason, they are sometimes willing to overlook your bad credit score and offer you a loan based on your character or other factors. They also tend to have lower interest rates overall and can sometimes offer personal loans with half the interest rate of other banks.
5. Consider Qualified Online Lenders
Banks, family, and friends are not the only places to look for a loan. Qualified online lenders can be an excellent resource when you need money with bad credit personal loans in Utah.
Of course, before you trust anyone with your information, it’s important to establish that they’re a reputable lender. The first step is to make sure they’re registered to do business in Utah. Simply confirm their status with the state’s financial institution regulatory bureau or the Better Business Bureau.
Read through their website, including the fine print, and make sure you know about any fees or requirements. The URL should start with https, not just http, which indicates that the data you enter on the site is encrypted and more likely to be secure. Also beware that some online personal loan lenders charge high interest rates for those with low credit, which will make it more difficult for you to repay the entire loan.
If you’re trying to build your credit with the loan, make sure the lender reports to the major credit bureaus.
6. Watch Out for Predatory Lending
One thing you should keep in mind is to be on guard for those who practice predatory lending. Some lenders will offer loans with incredibly high APRs or unaffordable monthly payments. Make sure to understand all the terms of your loan before signing, and don’t be afraid to ask questions. Taking out a personal loan should help you become more financially stable, not force you into a cycle of worsening debt.
The Good News
If you obtain a loan and then faithfully repay it, you should start to see a positive impact on your bad credit score. This will make it easier to get loans in the future. Doing this might require a stricter budget and identifying things you spend too much money on, but the results are worth it.
Our Options for Bad Credit Loans in Utah
If you’re ready to start looking for a bad credit loan that’s right for you, check out Lift Credit to see how you can quickly be approved for a variety of loans. When applying for bad credit personal loans in Utah with Lift Credit, your credit score is not reviewed and you can be approved within 24 hours. Another great aspect of loans from Lift Credit is that as you pay off your loan on time, the interest rates decrease. That means that even if you start out with a high interest rate, the interest will decrease as you reduce the amount of the loan with your payments, and you’ll end up paying less than the original rate. If this sounds like a good fit to you, read about the application process, or apply here.
Contact LIFT Credit to apply for a loan today!