You can have the worst credit in the world and still secure a loan. The question is whether or not you want to. Well, there may be very good reason to get that loan; you just need to know what you’re getting into. The way bad credit loans work is that interest becomes exceptionally high. It’s hard to find fixed-interest loans with poor credit.
If you’ve got an opportunity as a small business which can sustain the burden of a high interest loan, then good for you! But if you don’t, you’ve got to be careful. Here’s how interest looks on a bad credit loan. You can expect between 10% and 36% compounded on a monthly basis; and that’s on the “low end” of high interest loan options.
Now there are loans that only involve interest which compounds on the initial loan amount, but many compound based on the new owed amount. It looks like this: if you’ve got a $10k loan that is compounded at 10% on a monthly basis, then in the first month the loan amount compounds to $11,000. The next month, it’s at $12,100.
You can see how this would quickly increase on itself over time. Within ten months, your initial loan has more than doubled at such an interest rates. At 36%, you can expect a monthly compounded loan to double within three months.
Certainly, there are loans where the interest doesn’t kick in until a year’s’ time, but with bad credit you’re more likely to have compound situations that occur more quickly. All that being said, if you’ve got a good enough business opportunity, it could be worth it.
Conditions You Should Take into Account When Loan Hunting
Here’s what you’re looking for: will the income your business manages to make continue itself to compound in an upward way? Are you on the edge of an “upward spiral”, as the saying goes? Or, is there some bill that needs to be paid in the middle of an otherwise lucrative business curve? A loan can be very worthwhile in such situations.
All that being said, it is definitely possible to secure a bank loan for people with bad credit, but you’ve got to be careful; according to banking.loans, “when you’re looking for a personal loan, there are countless local and online lenders who’ll offer various amounts, terms, and interest rates.”
Searching through databases like these, you’re sure to find some option that will fit your needs, just be careful to go with the best choice out there. The idea of high-interest loans aimed at those with poor credit is to constantly keep them paying off the creditors. This means the creditors have a steady stream of income.
There are situations where getting a high interest loan makes sound financial sense, but there are also situations where this can be a death knell. The best advice is to understand your financial situation intimately, so that whichever situation you happen to belong to, you are able to handle the financial load.
Loans and Living Inside Your Means
If you can live within your means, live within your means. But if you need to pay off a bill quickly, sometimes you’ve got to get a loan, and there’s no other choice. But whatever your financial situation, know that there are options out there which can help you obtain the assets you need, when you need them.
Today’s loan market is hot, so be sure to take a close look at potential positives and negatives pertaining to the financial environment. Search carefully and you can find some extremely lucrative financial opportunities worth following through on.