Basically, it is a loan with a very low or bad credit score as a result of defaulting on loan payments, showing R9's on your Equifax report, going into collections and ending up in bankruptcy or consumer proposal. These loans are often called "sub-prime" loans and are perceived as high risk and therefore involve higher interest rates.
Can I get a car or personal loan if I have bad credit?Yes, there are many sub-prime lenders out there who will advance loans for cars, personal loans and mortgages -- but approval will depend on how much you owe and if you are in arrears.
Also, the amount you can loan will depend on your income, job, length of time on job and if you have the collateral of a paid off car or a home with sufficient equity.
The more collateral, the better your chances of getting a loan at better rates.
Is there a difference between bad credit lenders for personal loans?
Yes. Big differences. See below.
Finance companies which offer loans you are required to repay over one year or more (depending on how much you borrow) with fixed monthly payments including both interest and principal. Some allow you to pay off early and therefore pay less interest.
Some allow you to postpone payments without charge. Some also help repair your credit score by reporting to Equifax. You receive the highest rating if you pay on time. Ask about each company's rates, credit repair services and charges for holding a payment and if you can pay off the loan early.
Pay day loan companies which offer fast, short-term loans from payday to payday which usually must be paid back within two weeks, or occasionally over a month. These loans are only meant for short term. If you cannot pay back within that time, your interest will quickly grow not only on the principal of the loan but on the unpaid interest.
Your interest will skyrocket by hundreds and thousands of dollars depending on how long it takes you to repay.
The difficulty of paying off payday loans which go into default often results in taking out a second loan in order to pay off the first.
In the U.S., 76% of payday loans are repeat loans, or loans that are being used to pay off the original.
Credit card cash advances are often used instead of loans. The problem here is that often only the minimum payments are made and while this seems convenient this practice leads to huge interest charges.
Also, it will take an extraordinary amount of time to repay your loan.You must read your credit card statement carefully to see how long it will take you to pay back what you owe if you only pay back the minimum amount.
For example, if you make only the minimum payment of $40 on a balance or $2000 -- it would take you 30 years and 10 months to pay it all off and you would end up paying $4931 in interest!
The safest bet is to select the right finance company where you are given time to pay off all your interest and principal, open loans you can pay off early, repayment flexibility when there are problems, and an opportunity to improve your credit score.
Since 1984, Prudent Financial Services has offered the best credit repair services and the lowest-cost rates for people with bad credit histories in Toronto and the GTA. We offer fast same day car and personal loans. Also, Prudent Mortage Corp. offers competive mortgage and home equity loans. For more information about PRUDENT FINANCIAL SERVICES, visit our web site: http://www.prudentfinancial.net
Also, visit Prudent Value Cars, our quality pre-owned car dealership where you can get the car you want and the loan you need all on the same day. Visit our showroom inventory at http://www.prudentvaluecars.com.
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