Bad Credit And The Term Issue

People with bad credit usually have difficulties in obtaining the funding they desire. It is not that they can not obtain funds at all. It is just that the conditions of the loans, lines of credit and other financial products available are not sufficiently advantageous to provide the results that someone seeking financing wants. The term issue is usually a particular problem that affects most applicants with bad credit.

When we talk about the term issue we refer to the fact that the repayment programs or schedules of most financial products available for those with a bad credit score or history are usually not as long as they would desire. The consequence of this fact on the other variables of the loan such as interest rate, amount of the monthly payments and loan amount are usually also disadvantageous for bad credit applicants.

Personal Loans Available For Bad Credit Applicants

For those with bad credit, the only personal loans available are usually short term loans. These loans only offer small amounts for a reduced period of time. The length of the loan repayment programs can be extended up to a year at most. And even these personal loans are difficult to qualify for when the applicant has a bad credit score or history. The requirements for approval will be significantly harsher for them.

The only loans that will be available for those with bad credit with a simple approval process and easy qualification are payday loans. These loans are emergency loans that charge high interest rates and the repayment schedule lasts only a few months. Actually, most of these loans are due by the next payday of the applicant but can be extended for a new period of time if he chooses to pay only the fee charged for lending the money.

Getting Better Terms

There are mainly two ways for someone with bad credit to obtain a longer repayment program: a bad credit applicant can either provide collateral or apply with the aid of a co-signer. Getting a secured loan will contribute to guarantee approval but at the same time will provide a bad credit applicant with longer repayment programs because the debt will be secured by a valuable asset.

The other option is to apply with the aid of a cosigner. A co-signer is also obliged to repaying the loan just like the main applicant and thus, can contribute to meet the requirements for approval. Of course, in order to get better terms on a loan, the co-signer has to have a better credit score than the main applicant. Actually, the co-signer should have a clean credit report in order to obtain significantly better conditions on a loan.

Though bad credit usually implies short term loans, as you can see, there are ways of obtaining longer term loans and bypassing this problem. So, if you have bad credit, there is no need to despair. If you can get a home equity loan you will be much better off even if you had good credit. And otherwise, apply with the aid of a co-signer that confides in your repayment ability and you will get the financing that you need.