Life can be fun but challenging at times. We are living in an era where money controls everything. The world has made money appear like the source of true happiness. If you have the money you are happy if you don’t have it, you are in trouble. But again, there are so many turns in life, some positive and some negative. Something can happen and ruin your financial condition completely. It could be an unexpected huge medical bills or loss of a job. When such things happen, your ability to obey your financial obligations may be compromised. The result is often a low credit score, which means you may not be eligible for some loans in the future. If you are this condition, find comfort in knowing that there is a way out. In this blog, we are going to discuss the easiest loans one can obtain with bad credit. Read through and find the escape route you can take when faced with financial difficulty.
Lenders often examine borrowers’ eligibility for loans before approving their application. One of the most critical tools used for the eligibility test is the credit score. Credit score often ranges from 300-850 points. Most lenders prefer dealing with borrowers having at least 700 points. Bad credit often falls below 600 points, though lenders define the concept of good and bad credit differently. If you have bad credit, you can easily qualify for the following loans.
The lending sector in Singapore is well-developed and has a lot of secured loans you can quickly get approved for. Usually, when you have bad credit, you will always be perceived as a high-risk borrower. That is why you can hardly be approved for unsecured personal loans. But when you secure an asset as security for the loan, you are no longer a high-risk borrower from the lender’s perspective. The lenders will always have the right to use the asset to recover the outstanding balance in case you default. No doubt the fact that you risk losing the asset will motivate you to keep up with the payments.
Borrowing from credit unions is yet another fantastic option for an individual with bad credit. Credit unions operate like banks, though their primary purpose I to improve the welfare of members rather than profits. That is why they often charge lower interest rates compared to banks and other traditional lenders. Nevertheless, you must be a member in order to benefit from credit unions. Also, credit unions often operate on a regional basis. This means you must be living in a particular region to qualify as a member. Building credit takes time. If you have bad credit, better join a credit union and you will be assisted in many ways as you establish your credit.
Borrowing from Friends
If you have bad credit, then consider borrowing from friends and family members. Many people do not5 prefer this option, but it often works quite well. You only have to be careful not to lose your reputation and standing before friends and family members. Financial institutions may not understand the way friends and family members can. The government approves this kind of lending, and once you sign the agreement, it becomes legally binding, and you have to obey it. Any breach of the contract may attract legal proceedings against you from the lender. According to the law, it is the responsibility of lenders to explain all the terms of the agreement. This involves the interest rates, the repayment period, and other conditions such as whether the loan will be secured or unsecured. So, make sure you understand all the terms of the contract before appending your signature.
Also, the law requires the lender to give the borrower a copy of the contract. You must keep this copy for future references or in case of disputes. This is a delicate financing option, and you just have to be careful not to damage your relationship. For instance, it will be an act of kindness to the lenders if you notify them in advance any inability to make a payment. While the lenders often take the initiative to follow up in case a payment is past due, it is good to show concern and take the first initiative. Additionally, you can make a personal choice to secure the loan with an asset. This will show the lender your commitment to the loan.
Equipment financing is yet another fantastic option for you. There are so many equipment financing companies in Singapore. Approach one and you are more likely to be approved for a loan. There are two main types of borrowing in this regard, leasing and equipment loans. In this case, equipment loans can serve you better. The arrangement is more like secured loans.
Usually, the lender will give you the first enough to acquire an asset that you want and use it as a security to the loan. You will only gain title ownership upon repaying the loan in full. If you fail to repay the loan within the agreed time, the lender has the right to use the asset to recover the loan amount. Alternatively, you can lease equipment with an option to buy it at the end of the leasing period.
With bad credit, you can qualify for any type of loan that you want. You only need to look for someone to cosign for you. However, the co-signer must have an excellent credit score. This is risky to the co-signer because he or she will be held personally responsible for the loan as if they are actually the ones borrowing. Many people would try to avoid this arrangement, but if you have someone is confident that you will repay the loan, it can work quite well for you.
The Bottom Line
Having bad credit can prevent you from most loans. However, there are others you can easily qualify for. In this blog, we have considered the loans you can easily be eligible for with bad credit. Consider these options as you try to establish your credit. You can also check loanAdvisor online and check different loans that appeals to you. Let us know what you think by commenting below.