In spite of the tight credit market that we all hear about via the news, there are still many loan options available for borrowers with bad credit. The challenge is to find the loan that makes sense for your needs. Repayment options, interest rates, collateral required, and loan amount needed all impact a borrower’s decision about which loan to choose.

• Peer-to-Peer Lending – Peer-to-peer lending services act as a broker of sorts, connecting lenders with borrowers. While the borrower’s credit score is considered, bad credit is not usually a deal-breaker, since the loans are generally smaller. Lenders spread the risk among a large number of borrowers as a way of protecting themselves. Some of the loans are for as little as $50.

Borrowers apply online. It is free to apply. Questions about the amount requested, reason for the loan, credit score, and existing debt are answered online. If approved, the lender deposits funds using an Automated Clearing House(ACH), check, wire or with PayPal.
One of the best things about this type of loan is that the rates tend to be lower than other loans for borrowers with bad credit. What keeps the rates low is that lenders bid on the loans they want to fund. This process drives the interest rate down.

• Cash Advance Loans – This type of loan works for borrowers with bad credit since there is no credit check. The loan amounts tend to be for small amounts. As is often the case with high-risk loans, high interest rates are charged to cover the high risk incurred by the lender.

• Title Loans – Title loans offer another option for borrowers with bad credit. People who own cars outright can pledge their car as collateral for some quick cash. Due to the very high rates charged for this type of loan, this should be a last resort loan when all other possible resources have been exhausted. Usury laws do not apply to this type of loan, so it is not uncommon for the Annual Percentage Rate (APR) to be as high as 250 percent.

• Permanent Life Insurance Loans – Many life insurance policies have cash value. These types of policies can be borrowed against. This may be the easiest and best loan to obtain for borrowers that own this type of insurance policy. A check is often cut on the spot if you drop by the office. Credit scores are not a factor. Policyholders should read the Policy Loan Provision in their insurance paperwork to find out the details. The interest rate and repayment information is stated in that Provision.

• The 401(k) Loan – For borrowers lucky enough to have a 401(k), this can be one of the best sources for cash. Since you are essentially borrowing your own money, they do not check your credit.

This loan is often even cheaper than a bank loan. Strict regulations dictate that this loan be repaid in five years or less.

• Pawn Loans – Pawn loans are quick and convenient. A borrower can pledge personal property for a fast cash loan. As long as the debt is paid according to the terms of the agreement, then the collateral is returned to the borrower.

Jack Sperrow is a widely recognized financial blogger that writes regularly at http://www.loanshark.co.  The website advocates against illegal lenders by allowing borrowers to report lenders and financial scams.  Read more about Jack on his Google+

If you have a lot of debt, especially unsecured credit card debt, it may seem like a good idea to consolidate all of those little loans into one big loan – and indeed, doing so can save you time and money. Be careful, though, because different debt consolidation plans can either help or hurt your credit. Choose a plan that will get you out of debt as quickly and easily as possible while protecting your credit profile as much as possible:

Consolidating debt with a debt consolidation loan

Debt consolidation loans are the most popular way to consolidate and pay off debt. Rolling all of your loans into one larger, consolidated loan (preferably with better terms and interest rate) can actually save you money by reducing what you pay toward those debts.

Be careful, though, because it’s not always easy to find a debt consolidation loan with good terms, especially if your credit history has taken a hit because of recent financial difficulties, and/or because you’re carrying a lot of financial debt.

There are options if you have difficulty getting these loans through traditional lenders, such as peer-to-peer lenders like Prosper.com and LendingClub.com. You can also check with your credit union or bank, or search for an online lender that offers consolidation loans at reasonable terms. Make sure you do your homework before you sign up, though; there are lots of scammers out there, so make sure you double and triple check the organization’s reputation before you take the plunge.

How does this affect your credit?

Using a debt consolidation loan to combine and then pay off your debt can actually help your credit, since taking one out may let you pay off credit cards that are near their credit limits. Used wisely, this is a great way to manage your debt and maintain or even improve your credit rating.

Consolidating debt with a formal debt management plan

The so-called “debt management plan” or DMP is offered through credit counseling agencies; with this type of plan, you sign up as a client with the credit counseling agency, make one payment to that agency, and then the agency makes payments to each of your creditors, usually in exchange for reduced interest and lower payments. Again, make sure the agency you are dealing with is reputable.

How does this affect your credit?

Unfortunately, your credit will take a hit because you must close all of your credit accounts while you’re working with one of these programs. But it’s also true that FICO doesn’t care that your debt is getting paid off with the help of the counseling program, just that it is. What that means is that yes, your credit will probably take a short-term hit simply because you have to close all of your accounts while you’re with the programs; the effect is relatively short-term and will ultimately improve your credit if doing so lets you pay off your debt, though.

Consolidating debt by transferring to a lower rate credit card

You can consolidate credit card debt by transferring it from higher interest credit cards to a lower interest rate credit card; this can indeed help you pay off your debt sooner because your interest rate and monthly payment will be lower. However, be careful to be very disciplined. Don’t simply transfer the debt to the lower interest card, only to have interest rates jump after the introductory period so that you’re back in the same bind as you were before the transfer. Pay off the debt before the interest rates jump.

How does this affect your credit?

In general, your credit scores will drop when you open up a new credit card account and use the available balance on a credit card to consolidate debt. However, it’s a relatively short-term drop and probably worth it if you’re disciplined enough to pay off that debt before your interest rate takes a jump. It’s worth it to take a small hit if doing the transfer means that you can pay your debt off and save money at the same time. In the long run, you’ll actually improve your credit scores over time if you do so.

The author who contributed this article is Chase Sagum, Financial and Business blogger. Check out more of his content at www.lexingtonlaw.com.

Before you append your signature on any paper so as to secure car loans, consider the following tips so as to avoid any regrets;

Term length of the car loan

Before engaging in any serious negotiations to secure car loans, know what you can happily pay on monthly installment. Never forget to calculate the repayment period. The time frame should not be compromised by the interest rate charged. Some dealers could stretch the term length to an extent that by the fourth year of the loan payment, you will realize that you are servicing a car loan for a car that no longer impresses you.

Interest rate on the car loan

Consider checking out for the best lender charging a reasonable interest rate. Remember even if you are bankrupt doesn’t necessarily mean that you have to accept loan from a non trusted creditor who offers a high interest rate. There are companies who are ready to work with you on securing a manageable  car loan and at the same time help you improve on your credit history once a gain. Convince the company that you are serious on getting out of the bad credit trap. The first thing you can try out is to visit your bank as there are likely to offer low rate to their customers.

Large deposit

When applying for a loan putt down a large down payment on the vehicle. This will be a good indicator that you are committed to paying off the balance. Moreover a large deposit will relieve you of a higher monthly installment. To further cut down the possibility of future regrets, have a fixed figure on your mind on how much you would want to spend on the car and stick to it. Do not be swayed into any deal that will ensures that you can hardly secure a meal and other basic needs afterwards.

Break down the details of the transaction of the car loan

To avoid the risk of any confusion, make sure that the car dealer breaks down the deal into under stable details for example the car price, the financing terms and the trade in value of the vehicle you want to buy. Understand each part before rushing to make a decision.

Check for mistakes on your credit report

Check for any small errors on your credit report. For example any account that had been closed down but is still being reflected on your credit report as open must be corrected. You can easily be considered a bad debtor or high risk borrower on these small grounds. It is therefore wise to get a copy of your credit report so as to correct these anomalies which might stand in you way.

Whether you are just out of college trying to buy your first home or you are refinancing after your children have grown and moved out, you should have a copy of your credit score. Knowing your score puts you ahead of the creditors. Knowing that your report is free of errors and that anything negative has been disputed, gives you peace of mind.

When shopping for a credit report it can be overwhelming. Commercials will advertise free reports. However, once you log on to obtain your report there is a catch. Do not let the business of credit reports get you. You can get a free credit report. In fact, you are entitled to one.

Fair Credit Reporting Act

The Federal Trade Commission has a mandate known as the Free Credit Reporting Act. In this act you are entitled to a free credit report once a year from the big three credit companies: Equifax, Experian and TransUnion. The FCRA mentions that you should only request your credit report through annualcreditreport.com.

Common Requested Information

When filing for a free credit report one worry can be that you will have to give out personal information. With all the stories about identity theft this is a tough issue. Under the FCRA you will have to give your name, address, social security number and date of birth. You do not have to give a credit card number. If a site asks you for a credit card number, be aware that this is a red flag for a scam.

Many sites will say that they are issuing a free credit report when you sign up for a free trial service. However, they will ask for your credit card number at the time you sign up. If you opt for this service make sure that you read the fine print and cancel the trial before the deadline or you may get charged.

Another Option for a Free Report

Under the FCRA if you are denied a loan or application of some kind, you are entitled to ask for a copy of your report within 60 days of said action. You should receive an Adverse Action Notice which will state that you were denied credit, the reasons why and that you are entitled to a free credit report.

If you were approved for a loan, but your credit score affected the rate at which your loan was given in a negative way, as compared to other consumers, you will receive a Risk-Based Pricing Notice. If you do receive this you will find information about your score and what factors contributed to the negative risk that is associated with you as a client. Additionally, you will receive information on how to obtain a free credit report.

Some companies will send out a Credit Disclosure Notice, which will give you information about your credit score and how it was used in the approval process of your credit application.

Knowing Credit Score Factors

Your credit may change every day. Some of the items that affect your credit score are:

• How often you move
• How often you r payments are on time or late
• How often creditors or banks pull your credit report
• Whether you have disputed items

With these factors in mind it is important to know your score when you are looking for a loan or applying for a job. CreditKarma.com is a website that provides your score free. This site bases the score off of your TransUnion credit report. They will not charge for this service and you can keep an eye on your score.

What About the FICO Score?

There is one other score that may be looked at when you apply for credit or a mortgage, which is the FICO score. This score was once the do all to end all score. This is no longer the case. The FICO score is actually one of many scores that a company may or may not look at. It appears as if companies are now looking at your VantageScore, your credit report and other factors they determine in house.

When struggling with credit issues, know that you are entitled to a free credit report.

The author who contributed this article is Chase Sagum, Financial and Business blogger. Check out more of his content at www.lexingtonlaw.com.

Do you feel like your drowning in debt? If you answered yes, one of the most effective ways to get to the root of the problem is seek the guidance of a debt counselor. It is very difficult to look at your spending with an open mind when you are trying to take control of the spending and the debt without an unbiased professional’s help. The first step identifying where the problem lies is to schedule a debt consultation. During your appointment, an experienced debt counselor will help you come up with a plan to tackle your debt, but you must be prepared if you want the appointment to go right.

How to Prepare for Your Upcoming Debt Consultation

When you are being counseled about your debt, the counselor will give you personalized advice that is tailored to help guide you out of your current situation. To give you advice, the counselor needs to know exactly how much pay you take home, how much all of your living expenses cost, and how much you owe all of your creditors. Only you know who you owe money to and how serious your situation has become. While it is only natural to try and downplay the situation in your own mind, you should never try and downplay your debt to your counselor. Here are some things you can do to prepare for your consultation so that you have everything you need to come up with a feasible debt reduction plan:

• Do not accept any new credit card offers or loans. The key is to stop digging yourself into debt, and taking out new lines of credit will not help the situation.

• Gather documentation that the counselor will need to review your current situation. These documents may include: billing statements, past due invoices, recent receipts, judgments, all letters from your creditors, titles to your cars, property deeds, and credit card statements. If you do not have any of these on hand, access your accounts online and print the account summary page.

• If you love to make work easier for everyone involved, make a list of all of the credit cards you have. In the spreadsheet, you can put the current account balance and credit limit. This will help your counselor see which cards need to be tackled first to repair your credit.

• Bring pay stubs from the last two pay periods. If your income varies, try bringing at least three months worth of cancelled checks. This will help the counselor assess how much you are taking home and what percentage of your income can be used to payoff debt.

Debt counselors can help you choose the best debt relief option for your situation. What is right for one person may not be right for the next. Bring everything that you need to help your counselor assess your situation. With all of the right documentation and the right mindset, you can pay your debt down and put your mind at ease.

This post was provided by Heather Graham, a personal finance expert. He recommends the consumers proposal process for those facing dept problems. André Gabbay et Associés Inc. can help with debt consulations.