Get Mortgage Bad Credit–How Can you get a mortgage with bad credit?
Even after the subprime mortgage crisis, it’s still possible to get a mortgage with bad credit. These loans come with greater risks that I describe in my other post Best Mortgage Rates.
Experts say one relevant kind of loan to avoid is a mobile-home loan. High interest rates are very commonplace, and even if you can get one with terms comparable to those of a regular subprime mortgage, mobile homes diminish so quickly that refinancing is difficult.
One of the best places to look if you are in any state in America, is the Federal Housing Administration’s loan program. Because the government backs these loans, lenders can still offer competitive interest rates while assisting borrowers with credit scores of 580 and above.
Bad credit auto loans
Bad Credit is not an omen, there are plenty of reputable lenders whose business model and focus is built on bad credit auto loans that I think will better save everyone really well if I detail this loan instrument in a separate post on the Best Bad Credit Auto Loans.
However, beware: Unscrupulous dealers may take advantage of bad-credit customers with shady tactics including leading you to believe your credit is even worse than it is or requiring you to buy add-ons in order to get financing. In general, you also shouldn’t pay interest rates in the high double digits or sign for a loan with terms longer than five years.
Bad credit auto loans are just loans for car buyers with bad credit that have less favorable terms– generally a higher APR and a lower loan amount– than auto loans made to buyers with good credit.
Do not confuse auto loans that are meant for car buyers with auto title loans. You usually won’t need a credit check to get an auto title loan.
Payday loans are typically small, usually $500 or less, and made for a short period of just a week or two before repayment is required on your next payday. The lender usually requires you to write a check for the loan amount plus interest that can be used for repayment.
Many lawmakers have cracked down on auto title loans, which are now illegal in 31 states in America, while in the UK they are capped rates and parliament is working on a law that safeguards consumers.
Beware if auto title loans are still legal in your state. Like payday loans, they simply aren’t a smart choice for those with bad credit.
Similarly to UK, some states in America, have cracked down on payday lenders by capping interest rates, but 32 still allow the practice unabated.
You’re best off avoiding payday loans altogether.
Auto title loans.
The main problem with payday loans is the astronomical finance charges. Many lenders allow you to pay only the interest and roll over the loan. The CFPB has found that more than a third of borrowers take out between 11 and 19 payday loans over the course of a year.
Payday loans could be the most ubiquitous loan for people with bad credit. They’re also almost always a bad deal for you.
Auto title loans have short terms (usually 30 days or less) and extremely high interest rates that can range from 84% to more than 300%, according to the Center for Responsible Lending (CRL). These kinds of loans can easily trap borrowers who can’t afford to repay the loan in a cycle of debt as they continually renew the loan with interest-only payments. It’s like a trade mill, you just can’t keep up with!
The CRL and Consumer Federation of America found that a borrower of a $951 auto title loan pays more than $2,000 in interest on a loan he or she renews eight times.
Spotting Bad Credit Loan Scams
When you’re searching for a loan, bad credit puts you in a vulnerable position. Just because your terms won’t be as favorable as they would be with excellent credit doesn’t mean you should accept any old offer.
Keep your eyes peeled for these red flags while searching for the best bad credit loans
Legitimate lenders won’t tell you that you can get a loan without knowing your income, credit score, and other personal information. Any lender who guarantees that you’ll qualify before evaluating your information is probably bad news.
It’s against the law for lenders to charge you simply for filling out an application.
Lots of uninitiated contact.
If you’re getting constant mailings or calls from a certain company, be careful. Legitimate lenders don’t need to hound potential customers.
Some unscrupulous companies will closely copy the names of legitimate lenders to profit from their better reputations. Make sure you’re really doing business with the right company.
Pushy requests for personal information.
Once you know what kind of loan you’re applying for, you should only provide personal information to a company you trust. Be particularly cautious about giving out information over the phone, especially if you didn’t initiate the call.
It’s common sense to shop around for the best deal and wise to take time to evaluate how much you can safely borrow. Your lender shouldn’t pressure you to make a deal before you’ve considered your options.
Above all else, take a few minutes to check up on a lender yourself. Look at online reviews and the company’s Better Business Bureau profile.
How I Picked the Best Bad Credit Loans
Interest rates are a big consideration when you’re searching for a loan with bad credit, but there are other factors to consider.
Here are the criteria I focused on in my search for the best loans for bad credit
If your poor credit is indicating of deeper debt problems, you may also want to check out our series on debt management: The Best Debt Settlement Companies, The Best Debt Settlement Companies, and the Best Debt Relief Loans.
You’ll want to find a lender who knows your credit rating is just one part of a bigger picture, and you’ll need to make sure you understand what kind of loan you need, what kinds of loans to avoid, and how to avoid scams. A great place to start is to compare several loan companies using free loan search tools offered online.
I also extremely recommend a comprehensive shop around for unsecured loans, One main way for securing good loan offers is by having a variety of options. There are plenty of reputable lenders willing to work with borrowers who have less-than-perfect credit.
Higher loan limits:
While it’s common for some lenders to cap loans for bad credit at low amounts such as $1,000, the best lenders allow larger loans for those who need them.
Unfortunately, you’re not going to land a low interest rate with a bad credit score. Exorbitant APRs are out there, especially if you have very bad credit and are trying to get a loan without collateral. The best lenders still keep their interest rates competitive relative to your credit score.
Common fees include charges for loan originations, late payments, prepayments, and unsuccessful payments. Some lenders charge most or all of these; others don’t charge any fees at all. The best lenders keep fees to a minimum and charge a reasonable amount for those they do require.
You may want to pay off a loan as quickly as possible to save on interest, or you might want a longer term to keep your payments low. The best lenders don’t lock you into one or two predetermined terms, such as three or five years.
The best lenders understand that potential borrowers want to know potential APRs, loan amounts, terms, and fees before they start an application and include that information on easy-to-find pages on their websites.
Different jurisdiction statutes mean lenders may operate only in certain states. The best lenders have a wider reach.
I considered each lender’s online reviews and status with the Better Business Bureau. I gave the least weight to individual reviews, as it’s common for possible borrowers to give negative reviews for reasons such as being denied a loan.
When You Have Poor Credit, finding the Best Loan
Remember to keep your hopes realistic. You will without a doubt receive higher interest rates than borrowers with good credit. And if your APR is truly sky-high, don’t be afraid to think outside the loan box about other waysto get the cash you need.