bad credit personal loan

bad credit personal loan Bad Credit Personal Loan A bad credit personal loan is a financial solution for an individual who has bad credit and may or may not have any collateral to pledge against the loan, like an automobile. There are two types of bad credit personal loans: 1. Non-secured bad credit personal loan: With a non-secured bad credit personal loan, the borrower is not pledging any collateral against the loan. The lender is relying on the borrower's signed promise to repay the loan. These types of loans are often referred to as signature loans. If the borrower fails to repay a non-secured bad credit personal loan, the lender has no recourse other than to start collections proceedings or turn the loan over to a collection agency. Since the lender is at great risk of losing money, the interest rate on a non-secured bad credit personal loan will likely be near the maximum interest rate allowed by the applicable state for consumer loans. 2. Secured bad credit personal loan: A secured bad credit personal loan will require the borrower to pledge collateral against the loan (such as a car, furniture or other valuables). In the event the borrower does not pay the secured bad credit personal loan, the lender can claim the collateral and sell it to help pay for the outstanding loan balance. Since the lender has some collateral, the interest rate on a secured bad credit personal loan will likely be less than the interest rate on a non-secured bad credit personal loan. Although these types of loans carry a high interest rate, a bad credit personal loan can be a source of short-term funds for a person in a financial bind.