While it is commonly known that households that own their home earn more income than people who are renters, a startling statistic denotes that homeowners in fact earn up to 95% more than households that are renting. That surprising number makes it easy to understand why renters have a hard time managing their income and are sometimes forced to rely on loans to keep afloat. The problem is that it can be incredibly hard to find lenders who will offer money to people who have no real collateral.
Monthly rent can put a massive dent into income, and many renters are forced to live paycheck to paycheck in order to survive. Contributing to a savings account can be next to impossible and coming up with a down payment for a home is almost out of the question. All of this stacks up and can make it very easy to miss monthly payments and start a downward spiral that ends up negatively affecting your credit rating.
Thankfully, that is where bad credit personal loans come into play.
Essentially, a bad credit personal loan is a form of an unsecured loan and that means that you do not need any collateral and do not have to risk a valuable asset in order to qualify. This makes complete sense for renters as they do not own a home that they can use for collateral against a more traditional secured loan.
One of the best parts of a bad credit personal loan is the fact that you can use it in any way that you feel necessary. You can use it to buy furniture for your rental property, pay off debt such as credit cards, purchase a new car, or do anything that you feel would be beneficial toward realizing your short and long term financial goals.
Most lenders that deal with these types of loans are not really concerned exactly what you end up using the money for, however they are far more concerned with whether or not you will be able to make the repayments. If you unfortunately have bad credit, due to a number of circumstances, then you will need to seek out an alternative lender that specializes in these types of loans. The good news is that there are an abundance of them available on the market today, and Rate Rush can recommend trustworthy options.
The main advantage, or bonus, to a bad credit personal loan is the fact that none of the terms change and unlike a credit card, your credit is non-revolving. This means that the relative term and interest rate are fixed and never change, thus making your monthly payments the same each and every month. This is important for renters as it allows them to stick to a monthly budget and never be surprised by an extra large payment thanks to an unforeseen change in interest rates. As anyone that rents a home knows, an unexpected payment can be detrimental and send your bank account spiralling towards overdraft.
You should understand that these types of loans come with higher interest rates than other loans such as a home equity loan, specifically because they are designed for people with a higher risk factor because of a previous bad credit history, or because of the lack of collateral. While that seems like a drawback for many, the fact is that without a home your choices when it comes to a loan are more limited. Add on bad credit, and you are not left with very many options at all.
If you are struggling to pay off credit card debt or if you are really in need of making a large purchase such as a new car but simply cannot come up with the money, then a bad credit personal loan could be your saving grace.
Look into one today, and rest assured that you do have options even in the worst of times.