Due to bad credit, many customers have been rejected the loan. As the US economy is steadily recovering, investment in the housing market and other industries is increasing. The tendency to take a loan by individual consumers and also by small and medium businesses is also on the rising side.
The current scenario in the market is not as bad as it was in 2009, but it’s not too promising either. More so, small business owners can still secure a loan as they can hire a business strategist or look for options other than banks. But individuals may have to face difficulty getting a loan, especially if they have not-so-impressive credit.
The following tips could help them to get a loan.
Using Home Equity to get Low-interest Rate Loan
If there’s equity in your property and if you are making payments against the mortgage balance, the real value of your home will be more than market value. This could get you a loan that is tax-deductible and of low-interest rate.
Payday Loan and Cash Advances
Some people detest payday loan because it is short term. But they fail to notice one advantage that comes with a payday loan; payday loan is offered not only by banks but also by private storefront operations. However, this type of loan is banned in many states and charge an abnormally high-interest rate.
Cash advances carry interest rates that are less than payday loans. Another benefit of cash advances is that you can collect the money from ATM. But the interest will start to accrue as soon as the loan is obtained.
Both payday loan and cash advances are for short-term purposes. Don’t go for them if you need a loan for the long term.
Choose a Loan Based on Credit
If you have bad credit, getting a house loan could be immensely difficult, but getting car loan may not be that difficult. Besides, if you are unable to repay the loan, you can send the car to scrap yard and get money.
Similarly, if you are a student with solid academic credentials and have a poor credit rating, the wise thing for you would be to apply for a student loan as that is easy to obtain despite having bad credit.
Find a Co-Signer
A co-signer should be one, who knows you personally and have good credit. It is better than borrowing money from that person directly. Sometimes, people refuse to become co-signer because if the other party fails to repay the money, the creditor would ask him the make the full payment. So it totally depends on how you could pursue someone.
Make an Application to Credit Unions
First, you need to be a member of a credit union by depositing a token amount of money. Then you can apply for a loan. Credit unions are financial cooperatives, owned by members. The advantage of taking the loan from such organizations is flexible interest rate and better communication as those unions operate mostly from certain territories.
The tips mentioned above could help you get a loan, provided you know your expectation and abilities well. Other than the aforementioned tips, you can also try raising your credit score because a good credit score could increase your chances of getting a loan significantly.