Tuesday, January 15, 2008

How to Get a Bad-Credit Personal Loan


A bad-credit personal loan is a relatively new offering from financial institutions that recognize that a less-than-perfect credit history doesn't necessarily mean a borrower is likely to default on loan repayment. To secure a bad-credit personal loan, you'll have to have a clearly defined purpose for the money, which will in turn affect the terms of the loan and its repayment.


Difficulty: Moderate

Get a Bad-Credit Personal Loan

Things You'll Need

  • Credit application
  • Supporting documentation (credit report, proof of earnings, notarized list of assets and liabilities)



Step One

Find lenders that offer bad=credit personal loans. First, check with your regular bank. If that doesn't work, head online to see what's available through the many non-traditional financial institutions that have become key players in the personal finance marketplace.

Step Two

Identify the reason you're seeking a loan. If you need it for a major purchase, such as a home or a car, remember that you might be better off rebuilding your credit first so you can get a regular loan with terms that are more advantageous. Many people also get bad-credit personal loans for short-term financing for things like home improvements, weddings, honeymoons or to pay down debt.

Step Three

Compare the terms of the various loans you're considering very carefully. Look at more than just interest rates and repayment terms. Check carefully for hidden fees, high closing costs and other loopholes designed to increase the amount you'll end up paying back to the lender.

Step Four

Meet in person with the lender if you're applying through a bank, or complete your application if you're trying to get a loan through an online or wholesale financial institution. Make sure you know ahead of time what kind of supporting documentation you'll need to show, and bring it with you. Generally, lenders want evidence that you have assets to use as collateral and a steady, secure income stream to ensure you can cover your loan payments.

Step Five

Present your supporting documentation to the lender, complete all application materials in full, and do your best to give the impression that you're trying to turn the corner on your bad credit history.

Step Six

Review all the loan documents to ensure the terms contained therein are the same as the terms you agreed to. Sign off on the loan if everything looks as it should.

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