Options for Borrowers with Poor Credit

by admin on April 15, 2014

Consumers can choose from different types of loans, including secured and unsecured. Traditional and online banks and finance companies offer unsecured loans. Loans are reserved for creditworthy customers with solid income. There are different types of unsecured loans, including used and new car loans, consumer, and student loans. Banks and car dealerships offer auto financing to borrowers who plan to buy a vehicle. Financial institutions that offer auto loans request information such as vehicle age, model, make, etc. Student loans are also offered by banks, government agencies, and other entities. Loans under different government programs come in different varieties, including maintenance and tuition fee loans. A common feature of these loans is the fact that they are not secured against some valuable asset such as: ring

  • jewelry,
  • vehicle tools of trade, or
  • anything else of value.

The most important factor for banks is whether borrowers are able to meet their payments. Borrowers with a history of bankruptcies and defaults are risky candidates.

Borrowers fill in information such as their employer and income when applying for a bad credit loan. In addition to high interest rates, some lenders use unfair practices. Secured loans feature better terms, but they are offered to customers who pledge some valuable item as a guarantee of repayment. When applying for a secured loan, banks require proof of residence and income. Some financial institutions offer unsecured loans to borrowers with poor credit but require someone responsible for repayment in case of default. Borrowers are usually asked to present documents such as recent salary slips, photo ID or passport, account statements, and others.

The list includes documents such as

  • bank statements,
  • paychecks,
  • loan balances, and others.

The requirements are different for self-employed individuals and unemployed workers. People who apply for unsecured business loans are asked to present documents such as financial estimates and projections, bank statements, business leases and certificates, and others.

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