Regardless of the fancy title of “adverse credit loans”, these are basically loans made to people who have bad credit or no credit. They are not payday loans but are loans from lenders who specialize in lending money to people who have bad or very bad credit. They can be either secured or unsecured loans. And they can be a very good thing for people who have just gone through a bad divorce or a bankruptcy.
Secured loans are those where you pledge an asset such as your house to “collateralize” the loan. These represent less of a risk for the lender because if you default on the loan, it can repossess your house or whatever you pledged in the way of security. Some of the companies who make these secured adverse credit loans will actually loan you up to 125%of the value of the property you use as security.
Higher interest rate
In comparison, unsecured loans are basically signature loans, where you are not required to pledge any collateral to secure it. These loans represent a higher risk to lenders because if you default, all they can do is hassle you for the money or hire a collection agency to try to get it back. As you might imagine, these loans come with a much higher interest rate than those that are secured by your house or another valuable piece of property.
The good news
The good news of an adverse credit loans is that the approval process is not as tough as with other types of loans. For example, your credit score will not be taken into consideration and the lender won’t check your credit. This can make the loan process both quick and convenient. Since there are a number of companies making adverse credit loans, you can actually shop them and find the one that best meets your needs and comes with the best interest rate. This makes the Internet a great place to find adverse credit loans.
What if you are refused an adverse credit loan?
If you have a seriously bad credit history, you can avoid being charged a really steep interest rate by getting someone to co-sign the loan with you. This is a way to get a secured loan when you would not be able to get one otherwise. Of course, you will want to make sure your co-signer has a good credit score and is willing to take responsibility for the loan. If you can get a good co-signer, you should be able to get your adverse credit loan approved very quickly.
If you need to pay off debts, buy a car or a home but have a very bad credit rating, don’t despair. There are companies who are sympathetic to your plight and stand ready to help you with adverse credit loans.