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In Search For An Affordable Long Term Bad Credit Personal Loan
A long term personal loan gives a borrower the chance to submit lower monthly payments with a low interest rate compared to loans with short repayment period. Nonetheless, consumers need to be carefully when choosing a personal loan to make sure that they will not be subjected to unreasonable conditions.
Furthermore, people with bad credit history need to watch out for predatory lenders who may try to take advantage of their situation by imposing high interest rates and fees on account of their imperfect credit. In this article, lets discuss tips on how you can find an affordable long term loan for bad credit.
Unsecured Bad Credit Long Term Loan Personal Options
Before submitting your personal loan application to your chosen lending company, why not consider alternative solutions to your financial need? For instance, you may seek help from a family member or a friend who is financially stable and can afford to lend you the funds you need.
Borrowing from a friend or relative does not require credit check nor does it require collateral and you can surely arrange for a long term repayment with a low interest rate. The important thing to remember when doing business transactions with people to whom you are personally related to is to put all terms in writing, making sure that all involved parties have signed the agreement.
If you want to apply for a personal loan with no collateral, it may be difficult to get approved if you have bad credit history. Lenders who offer unsecured loans are often very strict when reviewing loan applications. You may be able to find some lending companies that extend unsecured bad credit personal loans but such loans may have very high interest rates which can put you at a great risk.
Secured Bad Credit Long Term Personal Loan Options Homeowners can apply for a secured bad credit loan. Most secured loans are accompanied with longer repayment period since the debt is guaranteed by the borrowers property. In the event that the borrower fails to keep up with the loan payments, the lending company can repossess the property; put it on sale; and use the proceeds of the sale to pay the debts defaulted.
It is also possible for a homeowner to apply for an equity loan. A home equity loan (HELOC) gives the homeowner the option to borrow money against the propertys value within a specific period. The borrower can take on debts until equity of the home has been reached. Afterwards, the borrower must begin paying back the lender according to the terms and conditions of the loan. To make sure that you will be getting an affordable long term secured loan despite your bad credit history, the borrower must do comparison and evaluate each potential loan provider. Aside from checking your personal loans interest rate, make sure that you will not be charged with hidden fees and that your lender will not impose sudden changes or increases in your loan during your repayment period.
Decide on a Loan with Care
You could be considering accepting one of the hundreds of advertised proposal on TV and newspapers for a personal loan which will combine all your debts into a single account for easier management of payments. Prior to calling them and filling out that form, you have to assess your present state of affairs and the possible repercussions on your finances. Because all these proposals are sugar coated to entice you to get their facilities yet they are not as perfect a solution as the lending companies make it appear to be.br>
It is but natural for a lot of individuals to look at exceptional deals with cynicism, and ask, “Whats the catch?” For most of us, when it comes to consolidation loans, we generally just look at the amount that can be borrowed and the corresponding monthly payments, disregarding the other terms and conditions of the contract.
Loan companies know the general psyche of a potential borrower only too well, so the proposals highlight only the loan amount and the monthly payments to determine which loan term we can afford to pay, without detailing what portion of the payment is actually going to the principal debt.
We have been made to believe that by combining all our loans, it will simplify debt repayment. What we do not look into more closely is how many years will it take you to pay back that loan and how much the total payout will amount to. No matter how light the monthly repayment scheme is made to appear, computing it against the total number of months, for instance 60 of months, of repayment could give an unbelievably staggering amount.
Put the payment terms in an annual setting and see if that will not change your entire perspective. After doing that, the next question you will ask yourself is will you want to be saddled with such a debt for five long years. If that looks okay with you, the next thing you have to do is compute how much will this consolidation loan going to cost you given the 5 year term. This might jolt you to reality and change your mind completely.
Generally, interest rates for these types of loans fluctuate from year to year. Sometimes they could go down and that will be good for you, but most of the time it is on the uptrend. So if you finally decide to consolidate your debt, dont just look at the monthly repayment affordability but the total amount it will cost you for the entire loan term. Another question you should ask is if you are able to, can you pay the loan in a shorter term than that which is stipulated, because if you can, then it is a good option to take.
Clearing all your debts in one action will actually give you a feeling of relief and happiness, but should come with a warning.
NEVER EVER even think of using your cleared credit cards again or you will suffer the consequence of ending up in more debts than you can afford to pay. This will totally put you in a financial glitch that may take you several years to recover from.