Personal loans are the most common type of emergency loans for those with bad credit, or a FICO score below 600. It can be hard for those with bad credit to receive an emergency loan. However, if you are able to qualify for an emergency loan, it will most likely be a secured loan, which will protect the lending institution from the chance that you might not repay the loan.
Secured Loans Vs. Unsecured Loans
Secured loans are loans with assets attached as collateral. The lender can feel more comfortable issuing someone with bad credit a secured loan, because the lender will get something even if the borrower cannot pay it back. Secured loans have stocks, houses, cars, or any promising financial assets listed as collateral.
A few lenders may give you an unsecured loan. However, they may be predatory lenders, which target individuals with poor debt needing an emergency loan. Predatory lenders don’t care if you pay them back or not, because they expect to make their money on extremely high interest rates and hidden fees.
Repaying Long-Term Installment Loans Vs. Short-Term Loans
Once you have chosen a type of loan, there are two ways to pay it off. Loans can be installment loans or short-term loans. Installment loans offer regular, fixed payments over a long period of time, such as six years. Interest is added to every payment. With an installment loan, you can often borrow more money than with short-term loans, and they’re usually secured loans.
With short-term loans, the money is usually set to be paid back sooner than 12 months, and you cannot borrow as much. Short-term loans tend to be unsecured loans.
Where Do I Get an Emergency Loan for Bad Credit?
After deciding which type of emergency loan is best for you, there are a few places you can go to request an emergency loan. Your options are online lenders, national banks, credit unions, and community banks.
For those who choose to borrow from an online lender, make sure to read customer reviews and research the lender in other ways. Watch out for predatory lenders.
With bad credit you may not be able to qualify for a loan from a bank. However, certain credit unions have programs in place for those with poor credit scores and who need an emergency loan.
Visit LiftCredit.com to apply for a personal installment loan, a perfect emergency loan for bad credit!