How to Get a Secured Personal Loan with Bad Credit
Get a Secured Personal Loan with Bad Credit
Getting a secured personal loan with bad credit can be a simple process even if you have experienced negative credit events such as foreclosure or repossession.
What Are Personal Loans?
Any loan that is obtained by an individual is a personal loan. The proceeds from a personal loan are typically used to cover personal expenses, rather than those of a business It should be noted, however, that sometimes self employed individuals will get a personal loan in order to fund their enterprise. The scope of personal loans includes two categories. The first being a secured personal loan (generally backed by some asset) and the second being an unsecured personal loan (where no collateral is pledged). Let’s examine secured personal loans.
Secured Personal Loans
Often someone with bad credit will still have collateral available with which it is possible to get a secured personal loan. The borrower simply pledges the collateral as a guarantee of repayment to the lender. This kind of secured personal loan works because, despite bad credit, the borrowers existing equity is sufficient to secure the loan. For this reason the secured personal loan is often referred to as an equity loan or collateral loan.
Many types of collateral can be used to obtain a secured personal loan with bad credit. Houses, land, cars and financial instruments such as stocks, bonds and insurance are popular choices. Bad credit secured personal loans serve the needs of borrowers with past or current adverse credit events such as late payments, defaults and judgments or personal credit risk factors like underemployment or spotty work histories and/or inconsistent residence history (new to area or at residence too short of a time). In such cases, the decision to make a secured loan for bad credit by the lender is based upon the collateral more so than the borrower’s credit history. Bad credit secured personal loans are often obtainable without a credit check because of the weight the collateral carries and the fact that the borrower is pledging the collateral.
Examples of secured personal loans available with bad credit.
Stocks – Value of stock may be borrowed against to get money.
Mortgages – Borrowers home or land is pledged as collateral for the loan.
Automobiles (New) – Borrower uses loan to purchase a vehicle, vehicle acts as collateral for the loan.
Auto title loan (New or Used) – Lien free vehicle can be refinanced using the auto’s equity; car is collateral for the loan.
Even with bad credit, secured personal loans can be easy to obtain. In many cases lenders will not request a credit check and instead place emphasis on the collateral. Concerns such as length of time on the job and time of residence are also discounted. Secured personal loans are generally fast to obtain. Without the need for credit checks or other arduous underwriting requirements, lenders are often able to fund loans the same day.
Secured personal loans can also allow more freedom than other alternatives. Where many loans require the borrower to maintain a bankbook or checking account, some types of secured personal loans waive such concerns.
If the borrower is unable to repay the loan as agreed they risk losing their collateral possessions. Secured personal loans, as with virtually all loans, charge interest meaning that the longer the borrower takes to pay off the loan, the more interest they must pay.
How to Get a Secured Personal Loan with Bad Credit
The fastest way to get a secured personal loan with bad credit is to determine what collateral you have available to secure the loan. Once you have established that you have equity in your chosen collateral you would be in a position to decide where best to apply for a bad credit secured personal loan. Determining how much equity you have may ultimately be up to the lender so if you are unsure, you may wish to apply first. You can also get a rough idea by spending a few minutes figuring out how much you owe (if anything) on your collateral and subtracting that amount from the fair market value of the collateral. The difference would provide a general idea of the equity involved.
Getting a personal loan secured by real estate may provide the most borrowing power (assuming the equity is there), but generally it involves credit checks and bank fees. It also may takes from several days to weeks before the loan is approved.
Secured personal loans for bad credit customers can also take time when utilizing financial instruments as collateral. In many cases those with bad credit would have exhausted much if not all of the equity in this type of collateral anyway. This would leave little to pledge as collateral. If enough collateral does remain, the process of borrowing against financial instruments may involve days to weeks.
Car Title Loans
Getting a secured loan with bad credit on a car title often provides the borrower with the most money in the fastest manner. In these cases the personal loan is secured with the vehicle title. The lender places a lien on the title and holds it for collateral until the loan is repaid. Normally, the borrower is allowed to keep using their auto while the title loan is outstanding. Many title loan providers will not require a credit check. Bad credit loans secured with a vehicle title historically are quick, short term propositions and can vary a great deal in terms of fees.
About Capitol Title Loans
Capitol Title Loans provides secured personal loans (title loans) for most anyone, bad or good credit. Capitol Title Loans is a direct lender, licensed and bonded in the state of Delaware. Our vehicle secured loans do not require credit scoring, and bank account or checking account. Capitol Title Loans does not charge any upfront fees.
Capitol Title Loans is dedicated to providing fast access to cash loans at the best rates available to customers in our area.
Capitol Title Loans Delaware locations include:
241 South Dupont Highway
New Castle, Delaware 19720
772 Pulaski Highway
Bear, Delaware 19701
Call (302) 221-0886