Q. How Should I Select the Best Short-Term Loan for My Requirements?
- Banks
- Credit Unions
- Payday Loan Lenders
- Online Lenders
- Credit Card Advances
All of these sources vary in their overall method of functioning. Therefore, it is good to consider all of their claims separately and understand which suits your requirements the best. The loan repayment period, the interest rates, and other criteria vary extensively.
There are many factors you should consider while applying for a short-term loan. It is imperative to deeply go through all of the involved factors before making a decision. The factors to take into consideration are:
- Will the monthly repayments affect me negatively?
- What is the APR charge for this particular short-term loan?
- What are the other charges I should be prepared to undertake?
- What qualifications should I fulfill to be eligible for this loan?
- When is the earliest I will receive the funds if I qualify for the loan?
Q. Will Joint Loans Solve My Bad Credit Issues?
When you have a bad credit score, you might be unable to opt for a secured loan on your own. This drawback is mainly due to the requirement of collateral on secured loans. On the other hand, if you feel the interest rate of unsecured loans is too high, you can opt for joint loans.
A joint loan is when you obtain a loan in collaboration with a guarantor who has a good credit score, which could be your spouse or your family member. When your co-applicant has a good credit score, the particulars look good on paper during the application.
Lenders are also happy with this type of arrangement since it does not compromise their security requirements. When your guarantor has a reputable credit score, lenders consider it a guarantee that you will make timely paybacks.
Q. How Can I Increase Flexibility in My Loan Options?
You can increase the flexibility in your loan options by opting for a peer-to-peer method of a loan transaction. This method is not as stringent as banks, and you can improve your chances at flexibility.
A peer-to-peer method of lending is when you receive a short-term loan from non-institutional sources. These sources could include other individuals or a group of people. Specialized websites can help you connect with the best peers to match your needs.
Their overall policies are relaxed, especially towards bad credit holders. Although their interest rate may be higher than banks, the scope for flexibility they offer concerning payments and eligibility criteria is pretty high.
Q. Are Hard Inquiries a Good Idea?
A hard inquiry is usually performed upon your request by the bank, and they thoroughly analyze your credit score. After this analysis, they decide whether you are eligible for a short-term loan with bad credit.
This elaborate process can deduct a few points from your overall credit score. Therefore, hard inquiries are not advisable if your credit score is in very poor condition already. However, if you feel the deduction will not have a significant impact, you can proceed.
Q. Secured or Unsecured Loans — Which Is Better?
The two major types of loans you can avail of include secured and unsecured loans. Secured loans are those that require you to submit collateral, which can be your house or any other tangible asset. On the other hand, unsecured loans do not require collateral.
Unsecured loan lenders compensate for this condition by charging high-interest rates on your loans. Therefore, you should make a decision based on your resources. If you have collateral to place and are confident of paying back the loan regularly, a secured loan is the best.