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Personal Loans for Those After a Bankruptcy
If you need a loan after bankruptcy, then you might need to understand a little bit about personal loans for those with less than perfect credit. This article will tell you everything you need to know about personal loans after bankruptcy.
Sometimes it’s not easy to get a loan of any sort after bankruptcy, but this simply isn’t true. Many people think that the bankruptcy must be eliminated from their credit report before they can apply and get approved for a personal loan. However, this thinking is wrong and even those with a recent bankruptcy can become approved for a personal loan from a bank or another lending institution.
Personal Loan Guidelines After Bankruptcy
It’s important to be very careful with any personal loans you decide to take out after a bankruptcy. Especially if you want to improve your financial situation. With a bankruptcy, you will have to take specific steps to help improve your credit score and get rid of some of the accounts you have defaulted on. Start by looking for the right lender that can offer you a personal loan after bankruptcy. Very rarely, a lender will require you to clear the bankruptcy from your credit report before they approve you for the loan you need and want.
Personal Lenders for After Bankruptcy
Many lenders offer personal loans after bankruptcy, but you still need to make sure you find the right type of loan for you and apply for one you will be approved by. As long as you have improved your credit score in one way or another, after bankruptcy, you will be able to find a lender that will work with you.
They will, however, look at the income you have and make sure you can handle the payments on the loan you want to take out. Credit won’t be the only deciding factor and if your income can support the loan, most of these lenders will take into consideration how much you make and how long you have been working for your current company.
Improving your Credit Score
Before you decide you want to get a personal loan after bankruptcy, you want to make sure you have done everything you can to improve your credit score. Your bankruptcy might cause your credit score to drop by as much as 100 points. However, once the bankruptcy is discharged and some of the debts go away or change your credit score will start to recover.
You want to make sure your credit has recovered quite a bit before you try to get a personal loan of any nature. You may want to hire a company to help settle some of the debts you still have or to help get rid of debts that your bankruptcy handled. If you can get your credit to the point where e you don’t have any negative debts, then getting approved for a personal loan will be very easy. Also, take the time to ensure any errors are removed or fixed. You can do this by writing a letter to the creditor or making a phone call and asking to have them report the correct information. If that doesn’t work, you can simply dispute the debt with the credit agency.
Other Things to Consider
Once you fix your credit, you still need to consider a few things before applying for the right personal loan for you. If your credit score becomes very good, many financial institutions will allow you to get a loan through them. It will not be very hard to get your loan if you have a good credit score and a strong income. Some lenders will charge a higher interest rate due to your bankruptcy. This is due to how risky your loan is compared to another one. Most lenders, however, will overlook your credit history and will not care much about the bankruptcy. Make sure you understand all the policies of the lender before you take out the loan.
Your debt amount could also cause you an issue, but after bankruptcy, this should all be cleared up. This type of loan will help you whenever you want to get a loan after you have filed for bankruptcy. Personal loans after bankruptcy will help you do more with your finances and will allow you to take care of anything you need to deal with currently or in the future.
Comparing Payday Loans To Personal Loans
Payday loans have, in many people’s eyes, a reputation as being an expensive form of credit. It’s certainly true that the imposition of a flat fee of 10% to 25% of the loan amount works out to be a very high APR when you take into account the short term nature of the loan, and although taking out a payday loan may actually work out to be cheaper than some other forms of finance such as long term credit card debt, the interest rate will still be much, much higher than that of a personal loan. So why do people take out payday loans if they’re so costly?
The first reason is simply speed. Many people resort to a wage advance when they literally don’t have any money left at the end of the month, and yet have bills to pay and food to buy. A payday loan can be arranged on the same day you apply, with the cash in your account the next day. A personal loan simply can’t compare to this – there will be complex forms to fill in, credit agreements to sign and return, credit checks to be carried out… the list goes on. When you need quick cash, a payday loan might well be the only answer.
Another advantage of these loans is the fact that you can borrow only a small amount if that is what you want, just enough to see you through your current cash flow problem. Most personal loans have a much higher minimum amount you need to borrow, and if you don’t need that much then you’re saddling yourself with unnecessary and unwanted debt.
A related point is that the repayment term of a payday loan is, by its very nature, a lot shorter. While the APR rate on a personal loan might appear to be much lower, by spreading the repayments over a longer term you may well end up paying more in interest overall. The combination of having to borrow a larger amount over a longer period is certain to cost more in the long run than taking out an advance of just the amount you need over as short a time frame as possible.
The final reason is that because of the way payday loans work, they’re very easy to be approved for. People with all kinds of credit ratings are likely to have their applications accepted, which is certainly not the case with other forms of finance.
No personal finance expert would recommend taking out a payday loan lightly, especially if you get into the situation of having to renew the loan every month, but taking the above advantages into consideration it’s easy to see why sometimes payday advances can actually be a perfectly prudent way of bridging a temporary financial gap.