Secured Personal Loans for People with Bad Credit

One of the grim facts of the recession is the number of people who have got into financial difficulty and been unable to repay the loans they had taken out when times were better. If this applies to you, you can take a crumb of comfort that you are in the ranks of millions of Americans caught in this trap. Every day, the number of people in this situation is increasing. Even if you are fortunate enough to have been able to keep up with your repayments and not have a bad credit rating against your name, you quite possibly know someone who is suffering from this problem too. There are over 10 million Americans caught in the bad credit trap. The question is what can be done and how do you escape?

Talk to the bank
This makes good sense; of course, it was often the bank that encouraged you to take out the loan in the first place. If you haven’t been able to talk with your friendly bank manager for a while, you might be surprised how thinks have changed. While the banks have been bailed out big time by the Federal Reserve, the shop is firmly closed for borrowers. If you still have money, you can borrow money, if you need money, or want to restructure your loans, the answer more often than not, is “forget about it”.

It is not the time to give up hope, while traditional sources of financial aid are not ready to go back to the market, and in particular for those people who have bad credit ratings, there are other sources that can help you. You will need to do your research and plan carefully. Don’t accept the first positive offer you will receive, because if you play the game wisely, there will be other available facilities. The only key factor is to have a game plan and stick to it.

The rate looks good but do I qualify?
Bad credit companies have sprung up, since the effects of the recession hit home hard. While the traditional banks have turned their backs on their customers, who in many cases have been loyal and trouble free clients for years, these institutions are really ready to step in. As you look at what is on offer, one of your first questions is how much interest will I have to pay if I accept a loan with this lender? The Annual Percentage Interest rate or APR is the key factor. All lenders will publish a rate. If you are looking at advertisements, in the newspaper or on an internet site, you need to remember that there are conditions that apply. The published APR should be available to two-thirds of borrowers. This is good but it may not apply to you, don’t take this rate as cast in stone, conditions may apply.

Lenders who are prepared to take on borrowers who have a bad credit history use a scoring system. When they evaluate those who are requesting financing, they view the spectrum of potential borrowers in shades of grey, not black or white. If you defaulted or were late with one or two monthly payments and now need to refinance, you will score more favorably than if you have a long history of delay and default. Most bad credit lenders will be able to arrange to consolidate your accumulated debts over a 5-year period. Their game plan is to gather all your various debts into one umbrella loan that they will manage and offer you a single loan that you will pay them on a monthly basis.

However, if having done the calculations, the monthly repayment is clearly beyond your means to pay, you should not be surprised if they turn your application down. Assuming this is not the case, there will be a credit score applied to you, the results of this analysis will dictate the amount of interest you will have to pay. When you get the proposal from the lender, consider it very carefully. Be sure that you can make the payments on a regular monthly basis and then decide whether to go ahead. It is possible that if you have assets like a home or an automobile that you may be asked to provide as a guarantee for the loan. Think, decide and move forward with both eyes open!