Do you find yourself needing short-term financial aid but are worried because your credit rating is poor? Has an unexpected bill occurred that is causing you both mental and financial stress? You aren’t alone!
Millions of hard-working Americans have financial difficulties crop up outside of their control every day and must seek emergency help to get by. It turns out that 40% of Americans wouldn’t be able to come up with $400 at short notice if required. Perhaps you are one of those Americans, who has fallen on financial hardship and needs help in the form of a bad credit loan.
Well fortunately for you, the accessibility of short-term loans is higher than ever, regardless of your credit score. Stick with this article to the end to find out everything you need to know about bad credit loans.
What Are Short-Term Loans?
First, let’s make sure we’re all on the same page. Short-term loans are a valuable resource for someone who needs emergency funding, fast! They are a type of signature loan, whereby you borrow money at short notice and typically pay it back through your paycheck, or another source of income.
You can obtain short-term loans within a matter of hours, even if you have bad credit or a low credit score, making them a perfect solution for life’s unexpected emergencies.
However, it’s important to know who and what you’re dealing with, so we’ve broken it down in this easy-to-read article below.
How Do Bad Credit Loans Work?
Thanks to our advanced technological era, MoneyMutual provides you access to dozens of lenders, right at your fingertips. You simply decide how much you need to borrow, and submit your information on MoneyMutual’s website to find you a lender. You’ll then be taken to that lender’s website to fill out their application, and you can have the money deposited in as little as 24 hours.
Choose MoneyMutual: The Best Company For Finding a Lender Offering Bad Credit Loans
MoneyMutual started in 2010 after realizing that a large percentage of Americans regularly needed loans to help cover the challenges of everyday life, but the information around choosing a lender just wasn’t available.
So they setup a service to make it simple and provide Americans with quick and secure access to lenders, for free.
Fast forward to 2022, and MoneyMutual have provided more than two million people with access to lenders, who have been able to help them with the money they need, for things like emergency expenses, holidays, unexpected bills and much more.
So great is their service, that even famous talk-show host Montel Williams was a spokesperson for MoneyMutual for eight years!
Benefits of Choosing MoneyMutual
1. Simplicity Is the Focal Point
The main reason to use MoneyMutual is that it’s simply designed to be as easy to use as possible. It was created for people in need of short-term loans, without the need for brick-and-mortar lending shops or long-winded application forms. It takes just a few minutes to find out if you meet a lender’s criteria for a bad credit loan (more on that below).
2. MoneyMutual Offers Full Transparency to the Process
Just look at the wealth of free information on their website and it’s obvious that they care about their customers. There are walkthroughs on how everything works, what you can expect from applying for a bad credit loan, and a handy FAQ with the most asked questions and answers.
3. Access to up to $5,000 (Or More!)
The basic form allows you to request up to $5,000, but some lenders are willing to offer more if you meet certain criteria. BEWARE!
A common trap people fall into is to apply for more than they need. This can cause repayment problems, so please ensure you are responsible and only apply for the amount to cover your needs.
4. Eligibility Criteria
Often-times when considering a short-term loan, you’ll be met with strict criteria from lenders, but not with the lenders you can find using MoneyMutual. The minimum requirements are that:
– You have a checking account
– You are a US citizen
– Your earnings exceed $800 per calendar month.
Not so difficult, right?!
5. It’s Free!
Perhaps best of all, there is no cost to the customer! MoneyMutual is a free service that puts you in touch with lenders at no extra cost. They don’t charge any service fees at all because they generate their revenue from the lenders, not from you!
– Easy to use: Form is simple and takes a few minutes to fill
– It’s free to use: No hidden charges for finding you a loan
– It’s safe: MoneyMutual protects your information
– Options: With over 60 lenders online at once, you will never be short of offers!
Keeping Safe and Using Trusted Lenders
Before we go on, we want to make sure that you are well equipped to remain safe online when looking for loans. Unfortunately, as with every industry, there are some fraudsters out there looking to steal your information. So, we’ve prepared a quick-look guide to stay safe, below:
HTTP vs HTTPS
Whenever you see ’https’ on a website, that means that the data on the page, including anything you type in, will be encrypted. This means it’s churned up into an unreadable format, just in-case hackers were trying to intercept the information you enter. We would advise that you NEVER enter personal information onto a website that doesn’t have https:// in the website bar.
Look For the Lock
Another basic sign of security that any website you trust should have, is a small picture of a padlock inside the website bar. In Safari, it’s just to the left of the website name, but in other browsers it may be somewhere further along the bar. This is another sign that the website is encrypting and protecting your data.
Whilst we can assure you that you’re safe with MoneyMutual , they do not own the websites of the lenders that you connect with. As such, the terms and conditions from each lender may vary (more on this below).
If qualified with a lender, you’ll be forwarded to the lender’s website where you can begin to apply for a loan offer. The offer should also include the lender’s contact information if you have any questions. Make sure that you keep this contact information for your records.
Do not rush into taking out a loan if you have unanswered questions, or if any of the security points above don’t check out. Always exercise caution!
Interest Rates Made Simple
As mentioned before, the terms and conditions for each lender will vary, and the most common variable will be the interest rate.
You will be faced with two different types of rates:
– Variable rate
– Fixed rate
As the name suggests, this refers to a rate of interest that is not set in stone. This will often be lower in comparison to a fixed rate you might find elsewhere, however you can really be caught out if you have repayment problems. In such a case, the rate can increase higher than what a fixed rate would have been, making it the more expensive option in the long run.
Conversely, a fixed rate will remain the same regardless of whether you repay on time or not.
Of course, we recommend that you only seek emergency funding where necessary and always for no more than the amount you need. This helps minimise the risk of repayment issues. However, you know your situation better than anyone and if you think there is a chance that you may hit a bump in the road with full repayment, perhaps a fixed rate would suit you better.
Fees and Late Payment Charges
Speaking of which, let’s talk about the fees associated with bad credit loans, and the potential penalties that can occur.
1. Processing Fee
It’s common place amongst pretty much all lenders to charge between 1 and 2% of the loan amount as a processing fee. For more information on the processing fees, always check the terms and conditions on your approved lender’s website.
2. Late Fees
Just like any finance agreement, if you are late repaying, you will be subject to fees. These will vary from lender to lender, but they are never cheap so always best avoided.
In addition to the pain of having to pay the fees, your credit score will take a hit for failing to meet an agreed payment date, making it more difficult for you to secure credit in future.
3. Customer Prepayment Fee
Another common practice is the use of prepayment fees, also known as early repayment fees. When you agree your loan, you will tell the lender what period of time you want to pay it back over. They will calculate your total repayment figure based on the loan amount plus the interest accrued for the time specified.
A lot of lenders will allow you to repay the loan early, and only charge you for the interest that has been calculated up to that point. However, some will not allow this, and you will have to repay the total pre-determined amount based on the agreed time period.
If you think there is a chance you’ll be able to repay before the due date, be sure to check the terms and conditions if there are any prepayment charges.
4. Interest Rates (APR)
APR stands for Annual Percentage Rate; it describes the total amount of interest that is accrued annually. It also includes any additional expenses associated with the loan. APR is 0.1% to 0.5% higher than the interest rate. The higher the APR, the higher will be the additional expenses associated with it.
On the plus side, this figure can usually be negotiated. So always try to get the percentage lowered with your lender, to minimise your total repayment amount.
Our Top Tips for Taking Out Bad Credit Loans
1. STOP! Do You Really Need This Loan?
Let’s take a quick sanity check. Do you really need this bad credit loan? Late repayments can cause serious financial repercussions, including increased charges and damaged credit score.
When you apply for a loan through MoneyMutual, you are given the choice of how much capital you want. Always triple-check the value and ensure it is just enough to cover the purpose for which you are borrowing. This is not the time to add on an extra $100 to treat yourself to some new sneakers!
2. Take Your Time and Assess Your Options
MoneyMutual is great because they hook you up with over sixty lenders, giving you the best opportunity to get a good deal. Make the most of this and be sure to thoroughly go through multiple options to ensure that you are getting the best repayment criteria for your loan. Remember the information above and consider the total potential fees, as well as the type and amount of interest rate.
3. Don’t Be Upsold!
One thing companies love to do is to throw add-on packages to a deal. Think back to the last time you bought a car, and the dealer tried to add-on a wheel shining package, interior protector, and additional warranty!
Well, loan providers are no different. They will try to entice you in with payment insurance products and other add-ons, that are of no benefit to you. Only them! They are ultimately providing you a loan as it is their business to do so, not because they are charitable people!
Provided you have followed the steps in this article, and ensured you need the loan and can pay it back on time, there is simply no need for you to have any additional services.
Borrowing Options for People With a Bad Credit Score
Today, having a bad credit score can seem like being locked in a cage with nowhere to turn. However, this is not the case. MoneyMutual can provide people with even the lowest credit scores, the option of securing a loan with one of their lenders.
However, it’s good to understand all of your options so we thought it best to list a few other alternatives that people could pursue before they opt for a bad credit loan.
Friends and Family
Now, you may have to swallow your pride a little but asking friends and family for help should always be the first port of call before seeking a loan. The interest rates can be very low!
We recommend approaching a friend or family member you believe could help, with an honest explanation as to why you need the money, and a structured repayment plan. Just like you would with a lender!
Secured loans offer collateral to the lender, as an insurance policy in case you can’t repay. For example, you could take a loan against your car so that in the event you don’t repay, the lender can legally recover your car as a form of payment. Generally secured loans are for large amounts of money so you shouldn’t encounter this in the short-term loan space, but it’s good to know.
Unsecured loans do not require any collateral. It is a simple two-way transaction, you borrow a certain amount of capital, and agree to repay a certain amount back. If you don’t repay, you occur financial fees, rather than giving up a predetermined possession.
Bad Credit Loans
Bad credit loans are meant for people who have a poor credit score, due either to past money troubles or a limited credit history. Due to the risk this poses to lenders, they tend to offer higher interest rates to people with bad credit scores than to people with good scores.
A payday loan is a type of short-term borrowing where a lender will offer credit at high-interest based on your income. Usually, the repayment model is based around you settling the loan at your next pay check, hence the term, Payday loans. They are also referred to as cash advance loans or check advance loans. Due to the ability to receive emergency cash quickly, Payday loans are the most popular type of short-term loan.
Whichever loan you choose, always follow our top tips to ensure that you:
– Only borrow what you need and can afford to repay
– Always carefully read the terms and conditions
– Stop and ask the lender if you don’t understand anything
Spotting Fraudulent Lenders
If you are looking for a bad credit loan, you could be in a stressful and vulnerable position. Credit fraudsters prey on this and try to take advantage of your position. Don’t worry, always refer to our top tips below, while looking out for the common signs of fraudsters to ensure you remain safe online.
1. Did You Get an Unexpected Call?
When you apply for a loan, it should be made clear to you at the point of application if the lender wishes to ring you to finalise anything. If you weren’t expecting a call, then this is red flag number one!
Make sure you get the lender to confirm the name of their company, and how much you requested to borrow. If they seem shady or can’t confirm, politely end the call.
2. Are You Being Asked For Your Banking Information?
Lenders collect this information online at the point of application. It’s safe and encrypted. If a lender is calling you and asking you to provide full card or banking details, this is red flag number two.
Again, politely ask them to confirm who they are and where they got your contact information from. An honest lender will never request your full payment information, so if they do, run for the hills!
Side note: Some lenders will ask you to confirm the last 4 digits of an account number just for security, to confirm they are talking to you. This is fine.
3. Do the Charges Add Up?
One tactic fraudsters use is to conceal charges. They add on fees to boost the total repayment value hoping you won’t notice. This is red flag number three!
They can be sneaky, so make sure that the total repayment figure makes sense. Does it add up to your interest rate + total amount borrowed? Also, check the terms and conditions for any clauses that state they can add on costs without reason. If those terms exist, we’d recommend finding another lender.
4. Have They Asked For Prepayment?
Sounds very counter intuitive but fraudulent lenders will ask for some form of upfront payment to process your loan. Avoid this at all costs. This is red flag number four!
You will never be required to do this as standard. The lender will likely take your prepayment and disappear, leaving you in a mess. Simply do not trust any lender that requests an upfront fee for taking out a loan.
Consumer Benefits of Bad Credit Loans, Payday Loans, and Emergency Loans
1. Instant Approvals For Bad Credit Loans
Perhaps best of all, Americans can get approved for a bad credit loan in just a few hours, with the money deposited into your bank within 24 hours. If you’re looking for emergency cash flow, this is ideal!
2. No Credit Checks on Your File
Since you have already told MoneyMutual that you have a bad credit score, there is no point in the lender checking it. They just want to know if you can afford to repay, so are more interested in your current financial status, ie employment, salary etc. As such your credit file is unaffected.
3. Can Help Improve Your Credit Score
Making repayments on time, even to a bad credit loan can improve your credit score. Your report will show that you borrowed money and repaid it on time, thus enhancing your credit image and potentially increasing your ability to get further credit.
4. Need a lot of cash? No problem
Similarly, to point one, if you can prove your ability to repay, most lenders will have no problem offering sums up to $5,000, or even more. Even if you have a bad credit score, you aren’t counted out. Just remember, only borrow what you can afford to repay!
MoneyMutual allows you to get deals tailored according to your requirements. You can discuss with the lender the terms of the package such as, interest rate, repayment times, and payment choices, to get a loan package that suits you.
Our Final Advice on Bad Credit Loans
If you’ve made it this far, well done for investing the time to ensure you remain safe online and get the right financial option for you!
If you are still looking for a loan for bad credit, MoneyMutual is the option for you. They will take care of your needs and ensure you stay safe and secure throughout this process.
Always remember, if in doubt, get out!