- Your current credit history shows your problems are resolved: Lenders are more willing to overlook a bad credit score if your current credit history shows you’ve fixed the problems. This usually means that you can’t have any debt that’s currently delinquent, any judgments are paid (e.g., tax liens), and that bankruptcies are resolved. The goal is to ensure your old issues won’t prohibit you from repaying the new loan.
- You have enough income to comfortably repay the debt: Before you can get a new loan, most lenders will want to make sure you have enough income to repay it. They’ll determine this by looking at your debt-to-income ratio. It’s also a good idea to review your budget to see if you can comfortably make the monthly payment before you proceed.
- Loan funds will help improve your overall financial situation: The other thing that lenders consider is whether the loan ple, getting a loan to consolidate existing debt into a single fixed-rate loan with a lower interest rate could help you pay off your balance quicker. Plus, you’ll save money on interest charges.
When shopping for a personal loan for bad credit, these are the most important things to consider when comparing lenders:
If you can’t qualify for a personal loan on your own, then there are other options. Some lenders will allow you to apply with a co-signer or co-applicant. This can be a good thing because you’ll be able to use their good credit to qualify. However, if you do this, make sure you repay the loan as agreed or you run the risk of ruining your relationship; if you default on the loan, your co-borrower’s credit will also be hurt.
To qualify for a personal loan with bad credit, you’ll likely need to meet certain criteria
- APR range: Loans come at a cost, which includes the interest rate and any fees, like origination fees. The yearly cost of each loan is reflected in its APR, or annual https://paydayloanstennessee.com/ percentage rate. This means it’s more important to evaluate the APR versus the interest rate or origination fee when comparing personal loan lenders.
- Loan amounts offered: Make sure the lender you choose offers a loan amount that’s big or small enough for your needs. Some lenders only offer loans of $5,000 or more, which could be a problem if you only need $500. In contrast, if you have a lot of debt to consolidate, you may need a lender that offers bigger loans.
- Repayment terms: In addition to the APR, the next biggest factor affecting the size of your loan payment is the repayment term. You’ll have the lowest overall borrowing costs if you choose the shortest possible repayment term since you’ll pay less interest over the life of the loan. However, this results in a larger monthly payment. Make sure you select a lender offering a repayment term that works with your budget and needs.
- Ease of application and funding speed: If you want to get funded fast, look for a lender that can not only get you funded within a matter of days (some can even offer same-day funding) but that also offers a simple application process. Many lenders offer online applications that take mere minutes to complete and let you know if you qualify without hurting your credit.
- Lender’s reputation: Make sure the lender you choose has a good reputation. Check consumer review sites for customer feedback and look at government sources like the Consumer Financial Protection Bureau’s Consumer Complaint Database. Doing your due diligence will help you choose a reputable lender.