Anyone with a bad credit score is also able to get a loan whenever he/she needs it. However, you will be limited to lenders who offer a bad credit secured loan. When you choose your lender carefully, you are guaranteed of getting the money to fulfill your needs.
To be eligible for a secured loan, you should be able to verify that you can settle it through a regular income that you receive. You can do this by offering the lender your latest payslip or bank statement. Resolving this moves you a step closer to finally getting the bad credit secured loan.
Since it is a secured loan, you need to give something as collateral. In case you want to use the money to buy a car, then that car can be used as security such that when you default in repayment, the lender can come possess it. Normally, you cannot sell whatever asset that you decide to use as collateral before repaying the loan.
It is important to settle the loan within the agreed time in order to build a good working relationship with the lender. Moreover, repaying it on time can be useful in helping you rebuild your credit score so that you can be eligible for mainstream loans. This is because these types of lenders are part of a large system of monetary institutions that have an impact on your credit card score.`
While your credit may have taken a beating in recent years, that does not mean you can’t secure a loan. What it does mean is that you will need to work with lenders who offer Bad Credit Secured Loan(s). Loans of this type generally have specific criteria that applicants must meet. By choosing the right lender, you can use this loan to purchase a car or something else you need, and also begin the process of rebuilding your damaged credit.
In order to qualify for a bad credit secured loan, you will have to provide the lender with proof of your monthly income. Your most recent paycheck stub will often suffice. The goal is to determine if you current make the minimum amount needed to qualify for the loan. As long as you make at least that minimum, the first hurdle in your quest for a loan is cleared.
Loans of this type also require some sort of security or collateral. If you are using the bad credit secured loan to buy a car, then the vehicle will usually serve as the collateral. In other cases, you may need to pledge some other asset that the lender is willing to accept. With most situations, you continue to have use of the pledged asset, but you cannot sell it until the loan is repaid in full. This is the basic definition of a secured loan.
As with any loan situation, make sure that the payment schedule is one that you can honor. Doing so will ensure that your reputation with the lender will remain positive and your activity will be reported to the credit reporting agencies in a good way. In addition, when the comments that the lender submits to the major credit reporting agencies are positive, you will see your credit score begin to rise in a matter of months.
Consumers who need to rebuild their credit histories can take secured loans to start the process. A secured loan is an advance that a lender gives to a person who is willing to offer some type of collateral. Usually, borrowers allow the lending institutions to place liens on their homes or their automobiles to ensure that they repay the loans.
Who Qualifies for Secured Loans
Generally, to receive an unsecured loan, the debtor has to have a credit score of 650 or more. Therefore, those who expect to qualify for these loans should have a credit score in the range of 450 to 650. Some organizations will accept applicants with lower scores than that.
Any consumer who is 18 years of age or older may apply for secured loans. For the applicant to be eligible to offer something as collateral, the property must belong to him or her. That person’s name must be clearly stated on the ownership document as the owner. The individual must also have identification and proof of income for the lender to consider. If the person meets all the previously stated criteria, the lending organization may approve secured advances.
The Benefits of These Loans
The greatest benefit of secured loans is that they give a person a chance to reestablish a trustworthy payment history. After approximately six months to one year, a debtor will start to see a rise in the overall credit score. Eventually, that person will once again be eligible for traditional unsecured loans and credit cards.
If you are like the average person, you probably have a lot of bills that you cannot pay. Each and every month you are probably paying the minimum payment to a few different credit cards and some medical bills. If you are going this rate, you are not going to get out of debt anytime soon. This is why it is always a great idea to consider a debt consolidation loan.
The Debt Collector (Photo credit: Wikipedia)
The way that this works is that you will send one check to a finance company who will take the check and divide it among your creditors. Once one of your creditors is paid in full, you will continue to send the same amount of money and that excess money will continue to go towards your bills. Each and every one of your bills will be paid every month. Many people will testify that the amount of money that they were paying was less than the amount that they were paying when they were doing it on their own.
Most people apply for an unsecured debt consolidation loan. Generally, this is a loan to pay off debt that is less than $10,000. If you have more debt than this amount, you may have to apply for a secured loan. This is where you would need a large piece of collateral such as your home.
Honestly, there is nothing that feels better than being free from your debt. If this is something that is holding you back, apply for a debt consolidation loan today.
It is perfectly normal for people to suffer from financial breakdowns every now and then. With the recent recession and the worldwide economic crisis, accumulating debt is something that a lot of people are already familiar with. Thankfully, strategies and approaches such as debt consolidation have been devised in order to help people out of such difficult situations. With debt consolidation, a debtor can just take out a single loan to cover all other debts, often at a much lower interest rate than that currently being charged.
The Process of Settling Your Debt
One of the most effective means to do this is debt negotiation, otherwise known as debt settlement. When we talk about negotiation, this refers to a series of processes where the debtor asks the indulgence of the creditor in terms of making the payment. For both parties, this would mean a new payment scheme where the interest rate is lowered. If this is not the agreement taken, the negotiation can also mean a lump sum payment lower than the original total balance to be given by the debtor as payment to creditor. Successful payment of that amount would result in your slate being wiped clean and you’ll be declared debt free albeit at the cost of not being able to avail further loans for some period of time, but that varies from creditor to creditor.
Negotiating the Settlement
Rather than risk getting no payment at all should the debtor decide to file for bankruptcy, the creditor will likely accept the debtor’s settlement. However, this is not an easy situation as creditors still have the final say during negotiation. Needless to say, a credit that has gone to collection will be negatively reflected on the debtor’s credit rating. It is therefore, in the best interests of both parties to arrive at a compromise. Legal and medical bills, personal loans service bills; collection agency debts as well as credit cards with high interest rates are just some of the financial obligations which can be re-negotiated.
Ultimately, when it comes to debt negotiation, it all boils down to a sincere talk and agreement between the creditor and the debtor. Nowadays, a lot of people would actually leave the negotiation to experts or to individuals who are really well-versed with the trade. Debt negotiation services have mushroomed because these professionals have devised simpler ways to face these kinds of financial problems. With their legal and financial expertise, they can navigate through most of the red tape and bureaucratic run-around that most debtors are subjected to. They can also probably get better rates from banks and lending institutions than a debtor who is inexperienced at these things. Although debt consolidation services do cost some money, most people who are already in debt consider this a good investment as debt consolidation services are often able to save their clients thousands of dollars.
Getting Back on Track
Most debt consolidation services also provide their clients with services that can help them get back on the right financial track sooner, such as financial advice and referrals to institutions who can take on their existing debts are much lower rates. Some companies also offer counseling for credit rating damage control and personal finance management.
Mark Anderson is a freelance writer who writes on behalf of SendOnlineFax. They review fax service providers and provide online fax service to SMEs.
A lot of people are into consolidating their debts but what exactly is Debt Consolidation and why should you consider it? Debt Consolidation simply means putting together (or “consolidating/combining”) all your small debts into a single debt (or two large debts). And why would you do this?
The two main reasons why you should consolidate your debts are:
1) You can avoid the hassle of paying back several creditors, making your financial management a lot easier and
2) You get a reduction in the cost of all your debts’ interest fees.
How Consolidation of debts work
When you are consolidating your debts, you essentially present a debt consolidation plan to one or two of your existing creditors, or, approach a third party lender to consolidate all of your outstanding debts. Your will be able to settle your debts with all your other creditors, and you get the option of paying only one (or two) creditors. Thus, consolidating your debts works almost just like a loan but not exactly. You will be given a lending solution but only so as to consolidate all your existing debts. Your consolidation lender will ask you to declare the total amount of all your debts and you would need to account for it.
Two ways to consolidate your debts
The first way to consolidate your debts is through self-regulated consolidation. This means creating a debt consolidation plan all by yourself which would save you extra money. This would require you to personally approach one or two of your existing creditors, and convince them to take over all of your other small debts and consolidate it into a single account under them. They would settle your small debts and you would need to pay only them for doing this. This method though would require a lot of discipline on your part in managing your money in order to pay off the consolidated debt.
The second way to consolidate your debts is by paying a Debt Counseling Service to make a deal with all your creditors to consolidate all your debts into a single large debt under the service. You will then pay a monthly imbursement to the Debt Counseling, which would distribute it to your debtors as payment for all your debts. This way, you’re accountable only to one body, your Debt Counselor. The down-side to this method is that you pay a small commission to your counselor for consolidating and handling the payment of your debts.
In any of the debt consolidation methods above, the important thing is to be able to manage your finances effectively in order for you to pay off all your consolidated debt, whether you are paying only a single creditor or paying for the service of a debt counselor.
The author is a freelance writer who writes about emerging communication technologies.
