When life gives you lemons in the form of unexpected expenses, a short term loan can save your day. Of course, 'short term' can refer to a vast amount of credit options; payday loans, credit cards, personal loans, installment loans, the list goes on. You need to get money in a hurry, but there are so many options. It's complicated! Which loan type is best? Which company is the best? How much money can you borrow? How long for? How do you avoid a ridiculous interest rate? Don't even get us started on credit ratings.
Short term loans can help us out in a cash flow emergency, or they can help us by spreading the cost of expensive life necessities such as weddings, paying for a new car, or upgrading your living space. Taking out a lump sum short term loan could be a smart way to consolidate existing debt.
At first glance online, you will find countless online companies promising you a short loan for bad credit, but how do you choose? Should you request payday loans or personal loans? When you start comparing the loans available, it can become a little overwhelming.
At Loanza we are here to help before things get too confusing. Let's start from the beginning!
Life costs money, whether we have it readily available or not. No matter how well you manage your money, an unexpected or necessary expense could crop up at any time. Taking out a cash advance loan, short term, personal loan could be the only answer. Short terms loans are unsecured loans to you from a lender designed to be paid back within a short period of time. The term 'short term loans' can be subjective and can refer to several financial products from a two week $100 payday loan to get your sink repaired, to a three year $2000 loan for a new kitchen.
Generally speaking, short terms loans are unsecured, minimizing the risk to the borrower. A secured loan is when you borrow money from a lender but tie that to a piece of collateral - something valuable like a car or a home. If you miss payments, continuously miss monthly payments, or fail to meet your loan terms some other way, the lender is entitled to claim this property as their own. Securing the loan usually applies when you borrow more considerable sums of money for a longer period of time. So, unsecured loans are when you take out a loan without tying it to your existing assets. If you fail to pay, there will be consequences, but you won't be at risk of losing your home or car. Even if you take out secured loans, most lenders don't want to end up in a position where they have to take your property, they would rather get their money back with interest as agreed. It is inconvenient to have to claim and then sell your house or car. They only secure the loan to protect their own interests and keep you motivated to make your payments on time.
Short term loans are not usually secured because generally, these loans are for lesser amounts of credit over a short period of time. Because the loan is unsecured, they can come with higher interest rates attached.
When you take out a loan you receive loan amounts upfront, then you repay the loan amount in installments with interest. The interest rate is how the lender makes their money, it's your payment for the borrowing service. Most short term loans are paid back in installments. They’re repaid in regular amounts at the same time every month until the loan agreement has been fulfilled. Following the loan request, as part of the process, you will sign your loan terms and agreements. This is a legal binding agreement to the fees outlined by the lender.
Sometimes there are other fees involved. For example, there may be penalties for late payments or for paying the loan off early. Like the interest rate, any fees should be detailed clearly in advance. Before you commit to a loan you must read and understand the loan contract.
When you are taking out a loan it's essential to keep the fees in mind. Loans should be a last resort as it is going to cost you more money in the long term, it's not just a cash advance of the loan amount you need, it's the rate of interest and possible additional fees as well.
We have been referring to lenders a lot so we just want to let you know what we mean by that quickly!
A direct lender is a financial business that offers loan services to individual customers, directly. There are no third-party brokers or any other intermediaries involved in the process. The borrower and the lender deal with each other in one smooth, direct, and easy process, usually online.
Direct lenders refer to any financial institution or company that provides personal or business loans. If the term lender or direct lender is used it is safe to assume they are not a traditional bank.
Like we mentioned a moment ago, life costs money. Sometimes we simply don't have the cash we need for the things we need at that moment in time. The reasons why people need or choose to take out a short term loan are arguably endless; home repairs, car repairs, medical bills, college supplies, avoiding late payment fees on existing bills. . . Only you know why you're looking for a short term loan to tide you over, every personal circumstance is different.
Everyone has a credit history, and based on that history we are allocated a credit score. The higher the score the better the credit. There are loads of common causes of bad credit; a person's history of failing to pay bills on time, paying the bare minimum on your credit card each month, too much overall debt. Failure to have taken out loans can give you bad credit. Having no credit history means that it is harder to predict whether or not you will stick to your loan terms. It's all about your reliability as a borrower. Your credit score can dictate the loan amounts available to you, the lenders who will loan a cash advance to you, the monthly payments applicable, and the interested rate.
Your credit score is a three-digit number computed from all of the factors mentioned above.
When you request any form of finance online, including a short term loan, a standard part of the process is a credit check. This lets the lender see how safe it is to give you a loan and helps them calculate the amount you will get and the interest rate applicable.
A credit check is a review that lenders such as banks or direct lenders carry out on your previous borrowing or financial history. It grants them access to information about your existing and past credit, payment habits, debt accumulated, and types of loans you have taken out so that they can assess your risk level as a borrower. When you request a short term loan your prospective lender contacts one of the three major credit bureaus to pull your credit report, this can only be done with your permission. You sign off on this as part of the process. The credit bureaus compile your credit history based on your credit accounts, using your social security number or other identification information. They then provide your credit information, in the form of credit reports, to lenders and creditors to help them determine your creditworthiness and the loan amounts available to you.
If you want to review your own personal credit report, then you can get in touch with them and they will let you know your credit score. This will allow you to better understand your credit situation.
There are three main credit bureaus in the USA, also known as credit reporting agencies. They are Experian, Equifax, and TransUnion. As we have explained these bureaus hold a report on you that lenders use to make their decision whether or not to lend you money. So where do they get your information from in the first place?
When you take out any form of finance, including purchases, the companies keep credit bureaus updated with many factors that contribute to your credit scores; your payment history, account status, when accounts were opened, and credit limits. They will also be able to use various sources to record any debt collections or bankruptcies that you experience. All of the credit bureaus get their information from a selection of sources, which are not always the same. They also use their own scoring models meaning that your credit scores will differ depending on which of the three bureaus they request your history from.
It's natural to worry if you find yourself needing a short term loan and already know that you have existing bad credit. You might not know what your options are or whether you have options available to you at all.
The good news is, YES, there are short term loans for bad credit available.
You do have to be careful when taking out loans on bad credit, you have to take extra caution not to further damage your credit score and you also need to be cautious in avoiding loan companies who will play on your fears and charge you an unnecessarily high amount of interest. In the interest of honesty, taking out a loan with bad credit will come with higher interest rates involved than if you had a good credit score. There will also be fewer short term loan options available to you and harsher fees if you default on your monthly payments. The reason for this is that giving a loan to you involves higher risk. Hope is not lost though, getting loans for with bad credit score isn't as tricky as you may think and a loan for bad credit score doesn't have to cost you over the odds. Like we have already mentioned, Loanza is here to help you find a great loan offer.
We know that there are plenty of reasons why you may have a less favorable credit history. It might be the case that you have somehow avoided using credit until now, so you don't have much of a credit history and therefore a low credit score. You may have simply run into financial difficulty in the past. We are not here to judge, we are here to help you maximize your short term loan options while helping you avoid ridiculous interest rates and further harm to your credit score.
Here at Loanza, we specialize in finding you a short term loan that fits your personal circumstances, loans for bad credit included. The lenders that we work with offer high acceptance options.
It means that you have got a high chance of your loan request being accepted. Simple. Regardless of your situation, we could still able to get you a high acceptance cash advance loan. The money could even be in your personal bank account on the same day. Many short term loans are available based on affordability and your debt to income ratio. If you need a loan with a bad credit score many direct lenders will still be willing to get you the loan you need. High acceptance short term loans are easily accessible if you have bad credit. They don't usually come with many mandatory prerequisites such as good credit scores, high income, guarantors, etc. When exploring short term loans for bad credit you will come across many companies promising not to check your credit score at all. Be wary of these lenders, it could be the case that they may offer loans with an unnecessarily high-interest rate attached. While it's true that you may have to pay a higher interest rate for a loan for bad credit, you still ought to shop around to make sure that the rate isn't over the top. Remember to carefully review the terms and conditions as part of your short term loan request.
There are two types of credit checks available when you are looking for short term loans; hard credit checks (also known as a hard inquiry, or hard pull) and soft credit checks (also known as soft inquiries, or soft pulls). If a company is boasting that they offer loans with no credit check, chances are they mean a soft credit check. Offering you a loan with no credit check at all would be bad for their business. Lenders do need to have some overview of your personal situation when processing your loan request. What if you don't pay them back? Loans are business, after all, if you don't repay the loan amount with the interest the lender would have to cover the cost for you, that doesn't make sense, does it?
A hard credit check is the credit check we described earlier in this article . . . when a lender checks your credit before approving you for a major loan that you’ve requested. A soft inquiry happens when you check your own credit report, or an employer runs a credit check. Sometimes, companies will run a soft check without you knowing to send you direct mail offering a 'pre-approved' credit card. It is pre-approved because they have already carried out a cheeky soft credit check on your details. When a short term loan company offers 'no credit check' they are being sneaky, they will run a soft credit check. Trust us. Soft checks are carried out without being tied to a specific short term or personal loan.
Soft credit checks will not impact your credit score. Only you will be able to see them on your report and you do not need to permit a company to perform this type of credit check. They do not result in bad credit or a reduced credit score, no matter how many soft checks are carried out. It is still wise to keep the amount to a minimum. They are not tied to a specific request for finance which is why they don’t leave a mark on your credit report.
You have to give explicit permission for a hard credit check to be carried out, this will form part of your short term loan request. This type of credit check does impact your credit score. When you take out any form of loan or contract that requires a hard credit check you will be asked to sign a credit report authorization form as part of the paperwork. By signing this document, you are agreeing to the credit check being carried out. Always be careful to fully read terms and conditions in case authorization is hidden in there somewhere! We recommend that you keep hard credit checks to a bare minimum, the more checks you carry out the more points you will lose. Plus, future lenders do not look favorably on repeated requests for loans, short term or long term. Relying on loans frequently could have a really negative effect on your future ability to borrow higher loan amounts like high limit credit cards and mortgages.
When you take out a loan, the last thing that you want to do is harm your credit score! To avoid this, make repayments on time. Don't take out a higher loan amount, just because it's available if you don't need it we recommended against borrowing it as this will cost you more long term.
Top Tip - Check your credit report from time to time to make sure that everything is in order. If you see any hard checks you believe you did not permit you can contest these and potentially have them removed from your credit history and your points will be restored.
So back to the matter at hand . . . as we mentioned, short terms loans are unsecured loans to you from a lender designed to be paid back within a relatively short period of time between a few weeks and a few years. The higher the amount of the cash advance, the longer the loan terms are likely to be. While often similar, and in some cases, identical short term loans can come in varying forms with different names. So let's take a look at the options available when you are shopping for short term loans for bad credit.
The first thing you may think of in an emergency is to ask your regular bank for assistance, and they certainly might be able to help you out. Short term loans can be available from your traditional high street banks which is excellent since you already know and trust them. To find out if your bank offers short terms loans, you could schedule an appointment or check on their website. The pros of borrowing with your bank are that they may be able to offer you a competitive interest rate, however, this is only likely if you meet their (usually quite strict) requirements. Generally speaking, traditional bank loans don't lend themselves well to those of us with bad credit so if you do know that you already have bad credit do not feel too disappointed if they can't help you out. To get for a short term traditional bank loan, you will definitely have to agree to a hard credit check. They may come with several other prerequisites that you could avoid by taking out one of the loans available online. For example, it is likely that as well as a hard credit check you would have to attend an appointment and justify your reason for requiring a short term loan and perhaps evidence what the money will be spent on before you agree to a loan amount. In some cases, you may be required to have someone cosign the loan and confirm that they will take responsibility for your repayments if you fail to make them.
Taking out loans in person can, of course, be more time consuming and some people prefer not to have to disclose too much personal information. Since bank loans for bad credit are uncommon, if you opt for a traditional bank loan then we recommend that you do establish your chances of acceptance beforehand. If your existing bad credit results in the loan request being declined then you risk turning your already bad credit into worse credit which of course you don't want to happen!
Credit cards are an alternative to short term loans also offered by traditional banks. Credit cards work just like your debit card, hence the name 'credit card' - it's spendable credit, on a card that can be used to pay bills and make purchases. Instead of the money coming from your own bank account or funds, it's deducted from your credit limit. Your credit limit works slightly differently from a loan amount. Your credit limit is agreed on at the point of agreement and then you can spend on your credit card up to that limit as if it were your own money. Credit cards have what's known as a grace period, where if you repay the money spent in 25-30 days you will have no interest charged. Any outstanding balance after 30 days then comes with an agreed interest rate charged monthly by the bank until the full balance is paid off. Credit cards can be a great way to manage finances short term and paying off your full balance on time every month comes with no interest charges and no fees. If paid on time they can be an excellent way to build your bad credit back up. Unlike short term bank loans, you will not have to provide the reason for borrowing money and can use your credit limit as and when you need to at your discretion. Again, if you do suffer from existing bad credit, a credit card will be much harder to obtain than other forms of short term loans so it is best to discuss your eligibility with your bank. You will still be considered for a credit card with existing debts and poor credit scores but a high-interest rate will likely apply. Credit card requests will definitely require a hard credit check.
Personal loans are ideal general-purpose loans if you want to cover one large cost. They are unsecured, fixed-rate loans that are not backed by collateral. Personal loans are repaid in monthly installments over a specific term. Personal loans lend themselves well to situations that are less of an emergency. A personal loan is named very appropriately. Personal loans help you with personal costs. These types of loans lend themselves well to wedding costs and home renovations. Basically, if you are looking to borrow a larger amount of money, for a longer-term, to cover a large expense or consolidate existing debt, consider a personal loan.
Personal Loans are available from banks, credit unions, and online. Unlike credit cards, personal loans allow you to get a fixed amount of money repaid over a fixed term at a fixed interest rate. If you fail to meet a payment then additional late payment fees may apply.
If you think that a personal loan is best for your circumstance but are looking for loans that allow you to avoid hard credit checks or have a quick turn around then an online personal loan is likely to be your best bet. Even though they are generally for higher amounts of finance, having bad credit won't stop you from finding a personal loan to help cover your personal costs! However, if you do have bad credit it is worthwhile to note that the lower your credit score is, the higher your personal loan interest rate is likely to be. As with any form of finance make sure that you shop around for the best interest rates.
You can use Loanza to shop around for you!
Installment loans are also named appropriately! They’re repaid in consistent amounts AKA installments at the same time every month, with a fixed interest rate. You will be able to request one despite existing bad credit and, like personal loans you can use them for larger expenses. It is often the case that a hard credit check will be required and again, higher interest rates may apply depending on your personal circumstances. Installment loans are usually offered by direct lenders and are readily available online. With both installment loans and personal loans, they offer a level of predictability and you know exactly the amount that you are required to pay back each month allowing you to easily budget for your repayments. Additional fees are only likely to occur if you miss/skip a payment or wish to settle your outstanding balance early. Paying installment loans back as agreed can help you build and improve your credit score!
Payday loans are surprise surprise, appropriately named! Payday loans lend themselves best to emergencies when you need smaller amounts of short term cash fast. Traditionally designed to be repaid in a lump sum on your next payday. Today, you can get more flexible terms and repay the money over around 1-6 months. You will be able to find an online payday loan really quickly, sometimes within minutes of submitting your request! This is the best option if you're looking for a soft check loan but please remember that they may come with high-interest rates attached so it is best to shop around as always.
As you can see there are loads of short term loans to choose from, each coming with their own pros and cons. It can be time-consuming to consider them all, then research various lenders and interest rates...
Here at Loanza, we can help you get a short term regardless of your credit history. We proudly work with all of the best direct lending companies in the USA and we can help maximize your chances of getting the loan you need. We work with loan companies who are known to have high approval acceptance rates to borrow with less favorable credit history, making sure the loan you get the right loan for your personal circumstances at the affordable apr/interest!
Submit your loan request to Loanza within two minutes. It's completely free! We will perform a soft credit check to try to connect you to a great loan available to you at the decent rates. Then simply review your loan terms, sign your agreement, and the loan can be deposited the same day if approved. Some lenders will offer 'soft search' loans and others will carry out a full credit approval which will show on your credit history. Please make sure that you read the fine print before submitting your loan request. Like we mentioned your loan could be accepted with a credit check, but if you really want to avoid that showing on your history, make sure you read everything carefully before signing.
Banks and direct lenders will set their own requirements for loans, which you can view online before starting the process. This means that the information required may differ slightly from lender to lender. However, you can expect to be asked for the following personal information as standard:
Personal Details - Name, date of birth, home address, email address, phone number, SSN.
Income Details - Employment status, income amount, how often you are paid, employer's contact details.
Bank Account Details - You may be asked to provide the details of any banks you have open along with details of any savings.
The information you supply will be used to confirm your identity, carry out a credit check, assess your eligibility, and process your payment. You may be asked for further details as part of the initial request or before it is processed fully.
Please remember to borrow responsibly and avoid unnecessary late fees by sticking to your repayment terms and making sure you pay each monthly payment on time. We recommend against borrowing a higher loan amount than you need.