Bad Credit Unsecured Personal Loans is Too Risky

By: Toukir Rahman0 comments

Personal Loans For Bad Credit where to start?

Bad credit loans – is it too risky?

Living a regular life moving forward with time, often errors knock at the door. Some odd troubles can really make you take such decisions, that you should have ignored.

Getting a  Personal Finance is complicated sometimes, especially, when you are considering, apply for personal loans with bad credit.


You probably already know that there are two types of personal loans:

  1.  Secured Loan
  2. Unsecured Loan

Moving forward, an unsecured personal loan can be the quickest and easiest way around. Because unsecured loans do not require you to provide any collateral documents. Documents like properties and assets that prove you are legitimate for the loan returns. In simple words, you really don’t need to provide any security deposit. As the processing is entirely online, using Fast loans service, the whole process quicken, as quick as the same day.

It’s so exciting that you can simply apply for a personal loan from your home, and get quick cash deposited in your account. Solves all the problems. right!

Let’s stop here, to continue for fast loans process service, for an unsecured loan. You need to prove that you are eligible for that loan and legitimate that you will return the borrowed money.

To ensure that, the first thing lenders will do, is to check your credit report (Get a Free Credit Report now). You can also compare the other personal loans for good credit, using the personal loans comparison tool.

But wait,

What if a bad credit score, What are the fast loans option?

Well having a bad credit score, does not mean you are not eligible for a personal loan. You can compare in between the best personal loans for bad credit and consider one of them.

Having said that, you apply for a loan, got approved. You received the money and problem solved!

 

Personal loans For Bad Credit Approved

That’s not it.

You might not be considering the facts, of a bad credit loan. 

Here is: 3 Top Reasons Not to Select Unsecured Bad Credit Loans

It’s not illegal or you are getting into legal staffs, its simple as similar to all the other lending products. Such as home loan, credit cards, car loan etc. We have listed the facts that actually should matter to you, in terms of how you are losing your valued money.

  • APR (Interest rates)

    Consider the first fact, that is the interest rate. Whenever you think of borrowing money from any financial institutions. The bank will lend you money and start getting profit from it. APR (Annual Percentage Rate) or interest rate is the key to their profit. The rates will be depended on loan purpose, your financial condition, and obviously your previous financial history. The loan manager will compare your financial situation, and consider taking a risk of lending money to you. Later you receive a final APR rate.

    Most of the unsecured personal loans for bad credit, the APR rates will be higher than usual. Starting from 14% up to 40%. You can consider comparing best personal loans offer the lowest rates possible. to see the difference.

    As I have already mentioned earlier. That the final APR rate will be decided by the loan managing body. But, just an example: you get a final APR rate which is 30%.

    Therefore, the situation will be borrowing 100 dollars, and payback with an extra 30 dollars each year (not to be exact). That is how you will be losing your valued money.

  • Repayment Term

    In most emergency situations when we urgently need money, we really consider taking a personal loan. To fill that gap in the financial emergency situation, we apply for a small loan. The loan companies have a repayment policy starting minimum 2 years to maximum 5 years. Now when you decided that taking a small loan is a quick solve. For an example: you apply for a $10,000 personal loan. You can choose your term, how many years you need to repay the loan.

    You set your term to be 2 years as the minimum. Therefore, you will be paying back the borrowed money for the next 2 years.

  • Prepayment policy

    There is another catch, unsecured personal loans for bad credit comes with, the prepayment policy. In case you want to pay back your loan earlier, you have to pay an extra fine. Therefore, throughout your term, you will be paying the higher interest rate set by the lender. Even consider paying back earlier you must pay extra too. But, with average credit score, you can get a personal loan with no prepayment penalties. Sun Trust bank offers Lightstream personal loans with no prepayment penalty.

Personal Loans For Bad Credit Example

Suppose you are borrowing $1,0000 from a bank as a personal loan. Your term is set to 2 years and you selected a fixed rate of 25%, with intallment loans term, you will be paying back as monthly. So, let’s do the figures:

The below table showing the figure of Total payments, principal amount and interest with total interest rates.

PaymentPayment AmtPrincipalInterestTotal InterestBalance
1$533.72$325.38$208.33$208.33$9,674.62
2$533.72$332.16$201.55$409.89$9,342.46
3$533.72$339.08$194.63$604.52$9,003.38
4$533.72$346.14$187.57$792.09$8,657.23
5$533.72$353.36$180.36$972.45$8,303.88
6$533.72$360.72$173.00$1,145.45$7,943.16
7$533.72$368.23$165.48$1,310.93$7,574.93
8$533.72$375.90$157.81$1,468.74$7,199.02
9$533.72$383.74$149.98$1,618.72$6,815.29
10$533.72$391.73$141.99$1,760.71$6,423.56
11$533.72$399.89$133.82$1,894.53$6,023.66
12$533.72$408.22$125.49$2,020.02$5,615.44
13$533.72$416.73$116.99$2,137.01$5,198.72
14$533.72$425.41$108.31$2,245.32$4,773.31
15$533.72$434.27$99.44$2,344.76$4,339.04
16$533.72$443.32$90.40$2,435.16$3,895.72
17$533.72$452.55$81.16$2,516.32$3,443.16
18$533.72$461.98$71.73$2,588.05$2,981.18
19$533.72$471.61$62.11$2,650.16$2,509.57
20$533.72$481.43$52.28$2,702.44$2,028.14
21$533.72$491.46$42.25$2,744.70$1,536.68
22$533.72$501.70$32.01$2,776.71$1,034.98
23$533.72$512.15$21.56$2,798.27$522.82
24$533.72$522.82$10.89$2,809.16$-0.00

From the above figure the final conclusion. The extra money that you would be paying is $2,809 (not exact) as total interest, in terms of borrowing $10,000 for the next 2 years. Which is considerably 28.09% or more of the total loan amount. But, your fixed interest rate was 25%.

Note: If you want a complete personal loan automobilized report of your expected loan amount as above example. Use the personal loan calculator to find the total interest rates and figure of your loan payments.

I personally do not consider,  personal loans for bad credit, to be the best possible way to for a small loan. Where credit cards can be a better option. Possibilities for getting the lowest rates and good prepayment plans. Therefore, I can simply pay off the borrowed money. Even before my term and add some extra savings to my budget.

A great budget plan is best for holding a flexible financial position.

A personal finance plan is all we need.

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