Are bad credit personal loans even a real thing? Yes, they are. In fact, there are several options available for this category of loans as well. Some bad credit personal loans require security in the form of collateral or a guarantee. Others do not and will rely on a higher-than-usual interest rate. It is important to remember here that a bad credit personal loan is very different from a personal loan that does not require any credit checks. These are most likely to be scams because any reliable lender will have a look at your credit score before approving your loan application.
In this article, we are going to talk about secured bad credit loans and how you can apply for one. But, first things first…
What Are Secured Bad Credit Loans?
A secured bad credit loan requires the lender to submit some kind of asset as collateral to get their loan application approved. This asset acts as a form of security for the lender in case the borrower defaults on the loan and is unable to make payment. There are several types of bad credit loans that require some form of collateral as security. These include car loans, secured personal loans, and home equity loans.
A car loan is a type of loan in which you purchase a new or used car. You can then use this car as security for a loan. Home equity loans work in a similar way. You can get a loan and secure it through the equity you have as a homeowner.
How Can You Apply for a Secured Personal Loan With Bad Credit?
Like any other personal loan with bad credit, there are several prerequisites to a secured bad credit loan as well. These include:
- You must be 18 years old
- You must be the recipient of a stable income for the last 3 months
- You must be a permanent resident of Australia and have an Australian citizenship
- You must have an active email address and contact number.
Additionally, the lender will also asses the purpose of the loan before giving approval. These requirements can change according to your lender as well. Depending on your lender, you can borrow a loan amount between $300 and $10,000. If you are looking for a loan amount that is less than $2,000 then you can also consider applying for an unsecured personal loan or a payday loan.
Most lenders offer a medium secured personal loan and a large secured personal loan. Let’s take a look at the cost of these loans depending on the lender.
Lenders that Offers Bad Credit Secured Loans
Monzi offers both medium to large secured loans. These start from $2,001 and go up to $10,000. The repayment period is between 13 to 24 months. You can secure this loan to a car, caravan, motorbike, or boat.
2. Fair Go Finance
Fair Go Finance also offers medium and large secured loans for applicants with a bad credit history. In order to secure a loan, you must provide collateral in the form of a car, motorbike, or caravan. Their loan repayment terms vary according to the amount you borrow. Unlike Monzi, Fair Go Finance can offer a secured personal loan for an amount as low as $500. They offer loans up to $10,000. Their repayment terms vary between 6 months to 18 months and they charge an interest rate of 17.9% p.a. You can make a minimum weekly repayment of $23.86 to $225.38 (depending on the amount borrowed). If you borrow a small loan amount ($2000 and below), then you will have to pay an establishment fee and a monthly fee as well.
Jacaranda offers medium and large secured personal loans. The loan terms vary according to the type of loan borrowed. Their medium secured loans can let you borrow an amount between $2,100 and $4,600. You can repay this loan in 13 to 24 months. The establishment fee is $400 and the annual percentage rate is 47%. You must secure this loan through a car, boat, motorbike, or caravan.
Their large secured personal loans let you borrow an amount of $5,000 to $10,000. Like the medium secured loans, you can repay these loans in 13 to 24 months. The annual percentage rate, in this case, is 21.24%. These loans need to be secured through a car, boat, motorbike, or caravan as well. You can set up a direct debit to repay these loans. This automates the payment process and you do not have to worry about missing a payment.
How to Choose a Good Lender
Borrowing a personal loan can be a difficult decision. Most people get overwhelmed by the cost and decide against it. If you are thinking of applying for a bad credit personal loan then make sure you choose a good lender. Choosing the wrong lender can add additional stress and may also cost you more. A few things you need to consider in this case include:
- What is the maximum and minimum loan amount that you can borrow?
- What is the payment term for the loan?
- What is the interest rate? Is it too costly?
- Is the lender flexible in terms of repayments?
- Does the lender limit your use of the funds?
- Can the bad credit loan help you improve your credit history?
If you believe that a certain lender can provide you with a secured bad credit loan on reasonable terms, then you can go ahead and file an application. If you require further advice or would like to explore more loan options, then that’s what we are here for. You can visit us at Bad Credit Personal Loans. We offer a variety of loan options for people with bad credit and can help you get a personal loan with flexible payment terms.