The first thing you have to know about acquiring a personal loan is that: this type of lending option usually has a higher interest rate as compared to say, a car loan or a house loan. Personal loans are considered as unsecured lending options, meaning that the borrower does not need to offer any form of security (collateral) in order to acquire some cash. However, for many lending establishments and financial institutions, the borrower’s credit score is usually weighed heavily against the amount of money being loaned out. If the borrower has a very good credit standing, then he or she is classified as a low-risk client; therefore, the additional interest rate is less as compared to borrowers with poor or bad credit rating.
So this goes without saying that a person who is trying to secure a personal loan with bad credit almost always has to deal with exorbitant interest rates — being considered as a high-risk client and all. Fortunately, there are several ways on how to secure a personal loan with easy payment terms, even if most lending establishments and financial institutions consider you as a high-risk client. Here are some things you ought to try.
1. Ask a loan officer for help. Seeking the services of a loan officer or a financial adviser might be the best thing you can do in this situation. This is especially true if your financial identity needs a bit of fixing up, and that your credit history is a bit blotchy. A competent professional can help you repair your credit rating, go over the detail of your credit history, and even find you lenders who might be willing to provide you a prime personal loan instead of sub-prime one.
As you might know, prime lenders usually provide lower interest rates and easier repayment options. However, they usually prefer to offer loans to people with good credit scores. On the other hand, sub-prime lenders usually accommodate people with poor to bad credit rating, but securing a personal loan from them might mean dealing with about 25% (or more) higher interest rate than their prime counterparts. This is of course, dependent also on the amount being borrowed.
In this regard, when we say personal loan officer or financial adviser, we mean a professional who can handle your case personally. It would be best not to seek the services of the loan officer who already works for the lending establishments or financial institutions you are trying to borrow from, as he or she might encourage you to acquire a loan that will benefit the establishment, rather than yourself.
2. Try to find private lenders who are willing to take a risk with your credit history. Private lenders do not operate on a commercial level, and some of them may be willing to extend you a personal loan with easier repayment schemes.
3. If all else fails, try to secure a loan from a sub-prime lender that will allow you to repay your debt in the easiest way possible. Look for policies that will allow deferment of payments for a couple of months at the very least, and policies that can give you long term repayment options. This way, your monthly dues do not pile up excessively, and you have extra money to use along the way.