For every question out there, people are sure to have answers. The only problem is that some of those answers are incorrect. When it comes to the idea of securing a personal loan, there are common myths that you want to avoid believing. By ignoring them, you can focus your attention on identifying a lender who can help you accomplish whatever goal you have for the loan. Make sure these six myths don’t deter you.
No Job Means No Loan
One of the most common myths is that you must have a job in order to qualify for a loan. The fact is that you much have some type of verifiable income in order to meet a lender’s standards. That income sources does not have to be from a job.
For example, many lenders will accept income sources like government benefits. If you have steady income from a private pension, alimony, or child support, the lender may consider these sources acceptable. Most lenders are happy to provide a list of what type of income sources they will accept.
A more important factor is the amount of income you receive. Many lenders do require that the applicant show proof of receiving the required minimum income per month. As long as your source qualifies and the amount does meet that minimum requirement, the application will be given every consideration.
A Low Credit Score Means No Real Lender Will Help You
Low credit scores do make obtaining loans from some lenders impossible. Those lower scores will not automatically kill all chances of being approved for a loan. In fact, there are lenders who are willing to work with applicants who have less than perfect credit. For example, there are Magical Credit bad credit loans with easy same day approval that may be just right for a number of applicants.
Even if you’ve been rejected elsewhere, looking for closely at lenders who provide bad credit loans makes a lot of sense. You may find that your steady income and a few other factors are all it will take to meet the lender’s requirements. That’s especially true if the events that led to your low credit score happened a few years ago.
Terms and Conditions for Bad Credit Loans Are Always Terrible
You’ve probably heard that all bad credit loans come with terrible terms and conditions. To be sure, there are loan offers out there with all sorts of fees, extremely high interest rates, and general terms that are difficult to meet. Those are the ones that tend to get the attention of people who warm you to stay away from bad credit loans.
There are other loan offers out there that come with terms and conditions that are much like the loans offered to those with superior credit ratings. The difference is that you are likely to pay a higher rate of interest than someone with better credit would receive.
As with many things in life, comparing loan terms and conditions will help you find lenders who offer more competitive lending options. In fact, you may be surprised at what sort of rate and the comparatively few additional fees that some bad credit lenders include in their offers.
Lower Credit Scores Mean Secured Loans Are Your Only Choice
Secured loans require that you pledge some sort of asset as collateral. It could be the house, the car, or anything else that the lender would accept. For the duration of the loan, you cannot sell that asset without the express permission of the lender. Once the debt is repaid in full, the lender relinquishes all claims to the asset and you can do whatever you like with it.
Some would tell you that all bad credit loans require collateral. That’s not the case. There are lenders who will place more emphasis on your steady income, a lack of recent credit issues, and you’re relatively good income to debt ratio. One of those unsecured bad credit loan offers may be just right for you.
Bad Credit Lenders Never Report to the Credit Agencies
It’s true that some bad credit lenders do not report to the major agencies. You’ll also find that many lenders of this type do report to at least one agency. That’s good, since you would like your prompt payment history to be reported. Lenders are generally happy to tell you which agency or agencies they report to regularly. If you go with one of their loan offers, your payment history could offset some of those negative events from a few years ago.
Using a Loan to Consolidate Debt Is a Poor Choice
There are times when consolidating debt doesn’t make sense. For example, if you could continue along for another year and be out of debt, there’s no real point to using a loan to pay off everything right now. On the other hand, if your loan comes with a lower interest rate than the rates that apply to those debts, it’s worth considering this approach.
To determine if using a loan to consolidate your debt, run the numbers. Will it help you get out of debt faster and save a little money? Do you have the self-discipline to not accumulate more debt while paying off the loan? If the answers are yes, talk to a lender about getting a bad credit consolidation loan.
Your goal with any loan is to improve your financial position. Set aside myths about the lending process in general and bad credit lenders in particular. Submit your application and see what happens. If you come across an arrangement that’s manageable, fair, and will allow accomplishing what you have in mind, accept the offer. In a year or two when everything is paid in full, you’ll be glad that you did.