There are lots of reason why you could have bad credit. It could be because were unable to pay some bills because you had medical expenses to prioritize. Or maybe you lost your job so you had to put off some payments until you get another job. Unfortunately, most traditional companies will not consider the reason behind your bad credit history. They will only see your record and use it as basis for approving or declining your application. That’s why as an alternative, online loans for people with bad credit exist.
Borrowing from Banks
Banks, as part of the core of traditional lending institutions, are worth your trust. You know that they are safe and they follow the state guidelines when it comes to loans. But with that reputation comes many guidelines and requirements. If you have bad credit, the proofs that you need to present could be more than expected as you need to prove your worth as a borrower.
Hence, you might need to present collateral, go through extensive and intensive interviews, fill out forms after forms, get certification from your employer, and even accommodate inspectors who would want to check on your home and workplace.
But in the end, you would still probably get denied – if you don’t pass all the rigorous and time-consuming steps. If ever your application for loans for people with bad credit gets approved by your preferred lender, then be ready for a higher interest rate.
Borrowing from Third-Party Lending Companies
When you’re borrowing from third-party lenders, you have to be extra careful in your choice. This is because you want to transact only with a lender who has been licensed by your state so you know that it follows what has been prescribed by law. Remember that there are about 15 states that have not yet legalized online lending so please make sure that your state is not one of them before you proceed.
Applying for online loans for people with bad credit is easier compared to banks. This is because there is no credit check so there is no need for you to prove your worth as a borrower. In most cases, as long as you can prove that you are of legal age, a US citizen and an employee who gets salary on a monthly, weekly or daily basis then you have strong chances of approval.
However, one consideration you need to remember is that online loans for people with bad credit are approved for smaller amounts compared to loans offered by banks. Now you know the difference between the two; it’s time that you take your best pick.