How to Personal Loans Help People with Bad Debt
Debts have many faces. At one time they can serve as an important source to finance your needs and desires while on the other side failure to repay any of the due payments on them can result in getting black listed as a defaulter and gifted a bad debt tag.
Bad debt is considered to be bad by many lenders and most of the time they have to face the refusal and denial regarding the loan application, they are looking for. If you too are tired of hearing “no” from the lenders, a bad debt tag can now get a bad debt personal loan for you that can bring back the relief in your life.
Bad debt personal loans help people with bad debt to access the cash needed with a loan tailored specifically for them. A bad debt can be a result of the defaults, bankruptcy, late payments, county court judgment or individual voluntary agreement made by you in the past.
Before going out to find the bad debt personal loan that matches your needs and expectations to the best, find out how bad is your credit score. When you get your credit report prepared make sure that the credit rating agency, you are applying at, is registered and reliable. To name a few, Experian, Transunion and Equifax are some of the credit rating agencies from where you can get your credit report.
Credit score or FICO score usually range from 300 to 850. A credit score of 720 and above is considered to be good while an individual with a credit score of 580 or below is considered be a victim of bad debt. Credit score is further classified into a range of grades varying from A to E. “Grade A “reflects excellent credit while people with a credit score of 520 and below are counted in the “Grade E”. People with grade C, D and E are considered in the list of bad debt.
Bad debt personal loan that one can borrow can range from $5,000 to $75,000. You can use the loan money to buy a luxurious car, to make improvements at home, to start a new business or finance the existing one or for any personal purpose. Bad debt personal loan can also be used to debt consolidation. Timely payment of the loan installments on the bad debt personal loan will help you in repairing your credit score.
Lenders usually find it risky to lend money to people with bad debt as the borrowers may repeat the same mistake they had done in the past. Thus, the rate of interest charged on the bad debt personal loans are comparatively high. The rate of interest popularly known as APR (Annual Percentage Rate) on a bad debt personal loan can be as low as 10% and as high as 20% depending on your credit score and the amount of loan that you are looking for.
Online lenders are the best options if you are looking for a fast, secure, low cost and convenient means of borrowing. You just need to fill in an online loan application form with some of your personal details and that’s it. By the time you submit the application form, you will be surprised to get a lot many loan offers from the lenders. The growing competition among the lenders to grab more and more customers has resulted in a decline in the interest rate. You too can take advantage of this cutthroat competition to get the desired loan package. Shop around, collect loan quotes from a number of lenders and then compare them to find the best loan deal.
Bad debt personal loans come in the form of blessing for a curse known as “bad debt”. Use the money you get with the loan in the best possible manner to get out of the debt trap as soon as possible to ensure a smooth and trouble free life. What if you have a bad debt tag you can now access a personal loan too.
How to Manage Your Personal Finance
The ability to manage your personal finance is key for successful long term financial health and stability. Regardless of how much you earn, being able to make your income work for you is essential. Not everyone requires a large salary and an expensive home and car to be happy, but they do need to be comfortable in terms of being able to eat and sleep in a healthy environment, and provide adequate clothing and shelter for their families as well. This can only be achieved through sensible personal financial management, that is, only spending what you can afford, not borrowing money over and above what you can realistically afford to pay back, and ensuring you and your family will be comfortable and able to maintain the standard of living when you retire.
Banks are often very willing to give credit to customers, which is where you need to be careful – they are not so easy going when it comes to paying the money back. Overdraft interest can be very expensive, and you end up paying back much more than you originally borrowed. On top of that, they charge high prices for going over the agreed amount, whether by accident or not, so customers need to be extra vigilant when approaching their limit. On the other hand, when the need is only short term, an overdraft is a very viable option. If you know in advance one month you will be caught short, then having an overdraft facility can be a big help. Similarly, simply setting up and overdraft but not using it until/unless there is an emergency will give you piece of mind that you will not struggle to suddenly raise any money unexpectedly.
Credit cards can be very useful, especially when using them as opposed to debit cards purely to take advantage of any spending bonus points/offers gained by regular use – which will only happen if the balance is paid off fully at the end of every month. Having a credit card for emergencies is again a sensible idea, especially for larger, unexpected bills such as car repairs. Many credit cards offer a 0% interest on the balance for a set period, often 6 months, and this can be manipulated so that you change company every six months to avoid paying any interest. Of course, this just keeps the interest rate down; it does nothing to shave the amount of what you owe. It is a common mistake to see credit as an extension of your wages – nothing could be further from the truth, it is not your money. You will have to pay it back at some point, and the sooner the better. Therefore, the best advice is again to only borrow what you can afford to pay back.
Finally, to secure your future when you eventually settle down and retire, it is an extremely advisable idea to set up some form of pension scheme, whether that is with your bank, or your employers. Pension schemes can move from company to company in the event of job changing, and your employers simply take a percentage of your wage each month and put it aside, to be given to you in a lump sum as and when you are retired, so you can maintain a good living standard when you are no longer working.