How To Secure A $1500 Loan With Poor Credit
Have you ever experienced a situation in which you needed a couple thousand dollars? Most people know the feeling, but for the millions of Americans with poor credit, acquiring extra cash is difficult.
In fact, nearly 1 out of 3 Americans have a credit score less than 601. A poor credit score hangs around your neck like an anchor, limiting your ability to secure loans.
However, there is good news for those with poor credit. There are a number of options available to secure a small loan.
Read on for a guide on how to acquire cash via a small loan. Here you will learn how to secure a $1500 loan in a timely fashion.
Do You Have Poor Credit?
Before pursuing a loan, research your credit report and scores. There are several free tools available on the web to check your credit history.
In general, credit scores range from 300 to 850. Any score below 650 is considered a negative score. At this point, your credit score hinders the ability to acquire financing for housing, cars, and credit cards.
Scores below 600 are defined as very bad. This likely means that you missed payments, defaulted on a loan or borrowed more than you could afford.
There are other negative impacts of owning a poor credit score. If you are approved for a loan, the interest rate is typically higher to account for the bank's perceived risk.
Where Can You Find a Small $1500 Loan?
When most people consider taking out a loan, the first place that comes to mind is the bank. However, large banks are likely to reject loan applications for those with poor credit scores.
Rather than face rejection at a large bank, look to local credit unions or online lenders for assistance. For unsecured loans, these institutions offer a number of advantages over the major banks.
For starters, online lenders do not require any collateral to approve a loan. Collateral is an asset that you offer up to the bank in the event that you default on the loan. In many cases, this means listing your home as collateral to acquire liquidity.
However, this is an extremely risky decision. If your financial circumstances change for the worst, you're now at risk of losing your home.
What Are the Other Benefits of an Unsecured Personal Loan?
Besides the fact that an unsecured personal loan does not require collateral, there are other advantages as well. For instance, credit unions and online lenders evaluate your application using different factors. You could get a $1500 loan without a lender even looking at your credit score.
These institutions are more personal and do not judge the application solely on a poor credit score. Instead, application reviewers look at a variety of different factors to reach a decision.
Examples of these different factors include education level and line of work. The lender may overlook a poor credit score if you work in a stable field or have a college degree.
What Is the Catch?
There must be a catch to such a great deal, right? You can rest easy that there are no hidden stipulations in the terms and conditions of the loan, but be sure to read it so you know the expectations of the loan.
Like all $1500 loans, unsecured personal loans are required to meet quality standards set by the United States government. These government regulations require personal loans to meet affordability criteria.
One such criterion is an Annual Percentage Rate not to exceed 36%. Additionally, the loan must have a duration of 3 months or more. Lastly, fixed payments must be offered so borrowers are not subjected to wild swings in monthly payments.
What Are the Disadvantage of a Personal Loan?
For those with a poor credit score, there is one major disadvantage compared to those with good credit. This comes in the form of a higher interest rate throughout the term of the loan.
First off, a higher interest rate increases the monthly payment. You may pay hundreds in interest each month depending on the terms of the loan.
In addition to a higher monthly payment, borrowers with poor credit may not receive the same benefits as those with good credit. To entice reputable borrowers, the credit union may offer incentives such as waiving application fees.
Lastly, you may be asked to open up a savings or checking account to apply for a loan. Many credit unions employ this practice, which turns off some prospective borrowers.
What Should You Do If You Need Money Fast?
The beauty of the 21st century is how quickly you can acquire financial assistance. In the past, paper applications were mailed or delivered in person and it took weeks, even months, to review.
Today, online lenders can automatically review and approve a loan application. Rather than waiting for a check to come in the mail, a $1500 loan can be directly deposited into your account soon after approval. In fact, it could take just one business day to see the money in your account.
What Is a Typical Term For a Personal Loan?
Personal loans from traditional banks typically have loan terms of 5 years or less. However, credit unions and online lenders offer much shorter terms.
For instance, an installment loan for someone with a poor credit score has a 6 to 9-month term. The intention is to give people an infusion of cash. Then, the loan is paid off quickly.
This is good for several reasons and can help you in the long run. First, the short-term allows you to pay the balance off quickly and get it off your credit report.
Second, on-time payments may improve your credit report as well. Acquiring a $1500 loan from a credit union or online lender leads to a higher credit score with responsible loan repayment.
Wrapping It Up
There are moments in life when a short-term infusion of cash can save the day. Perhaps you have unexpected medical bills or an expensive car repair.
The good news is that there are small loans available, even for people with poor credit. To speak with an expert on how to acquire a $1500 loan, please contact us for additional information.