Needing money quickly but have bad credit? Short term personal loans with guaranteed approval are an option to get fast financing even with poor credit. This comprehensive guide will explain what these loans are, their benefits and drawbacks, tips for getting approved, and alternative borrowing options.
What Are Short Term Loans for Bad Credit?
Short term loans for bad credit, also known as bad credit personal loans, are unsecured loans designed for people with poor credit. They provide access to fast financing from $500-$5,000 with fixed interest rates and terms of 3-24 months.
These loans have guaranteed approvals and flexible eligibility requirements that look beyond just credit scores. Lenders understand applicants with bad credit need access to financing too and are willing to overlook credit challenges. Their main requirements are steady income, a bank account, and proof you can repay.
The application process is streamlined with quick verifications and funding. This allows borrowers to get approved within minutes-hours versus days-weeks. The money arrives as fast as the next business day.
Benefits of Bad Credit Short Term Loans
- Guaranteed approvals – Lenders approve up to 99% of applicants regardless of credit. Their eligibility focuses on repayment ability.
- Quick access to financing – Get approved and funded in as fast as minutes-hours versus traditional loans that take weeks.
- Fixed interest rates – Interest charged is fixed for the entire loan term so payments stay consistent. Rates start as low as 5% APR.
- Fast funding – If approved, funds can be deposited directly the next business day.
- Improve credit – Making on-time payments builds positive payment history and can raise credit scores over time.
- Credit education – Some lenders provide credit resources and coaching to help borrowers improve their financial health.
Drawbacks to Consider
While beneficial for quick funds, these loans also have some downsides to weigh:
- High interest – Interest rates are lower than options like payday loans but higher than traditional personal loans. Rates can reach up to 35% APR.
- Fees – There are origination/processing fees of 1-5% deducted from the approved loan amount.
- Short terms – Maximum terms are only 1-2 years so payments are spread over less time. Monthly payments are higher than longer term loans.
- Small loan amounts – Loan amounts max out at $5,000 so these aren’t suitable for large borrowing needs.
- Risk of debt traps – Repeated rollovers or back-to-back borrowing to cover payments can lead to cycles of debt at high costs.
Tips for Getting Approved
If you need funds fast despite bad credit, here are tips that can help with getting approved:
- Check eligibility requirements – Make sure you meet the minimum criteria like age, income, and banking requirements before applying. This saves you time.
- Know your credit – Get a free credit report to understand your credit health. Lenders will check so knowing your score and history helps set expectations.
- Boost your credit – Take steps to improve your credit before applying, like paying down balances and disputing errors. The higher the better for approval odds and interest rates.
- Provide all required documents – Have needed documents ready like proof of income, government ID, and bank statements to speed up verification.
- Apply to multiple lenders – Don’t just apply to one lender. Applying to several lenders improves your chances and lets you compare offers.
- Sign up for automatic payments – Lenders prefer borrowers who agree upfront to auto-pay from their bank account. This lowers default risk.
- Bring a co-signer – Adding a creditworthy co-signer with steady income can help strengthen your approval chances and secure better loan terms.
- Explain past credit issues – Contextualizing past issues like medical problems or job losses can help sway lenders if you’ve taken steps to improve since.
Alternatives to High-Interest Short Term Loans
If you want to avoid steep rates but still need money quickly, here are some options to consider:
- Borrow from family/friends – For low or no-interest financing, ask relatives or friends to loan you money and draft repayment terms.
- Credit union payday loans – Some credit unions offer small emergency loans at lower rates than other lenders.
- Peer-to-peer lending – Websites like Prosper and LendingClub connect borrowers and individual investors for personal loan options.
- Cash advances – While fees apply, credit card cash advances may have lower rates than short term loans if you pay back quickly.
- Employer advances – Some employers provide advancements on paychecks interest-free with amounts deducted from future pay.
- ** Credit counseling agency loans** – Non-profits may offer low-cost loans along with financial guidance tailored to your situation.
- 401(k) or life insurance loans – Borrowing against existing policies means paying yourself interest while building credit.
- Delay payments – Contact service providers and creditors to arrange postponing payments by a month without late fees or credit impacts.
- Short term personal loans with guaranteed approvals help borrowers with bad credit access fast financing through streamlined eligibility and application processes.
- Benefits like quick funding, fixed rates, and potential credit building make these loans an option for covering emergency or short-term needs.
- However, the high interest rates, strict terms, and risk of debt cycles mean borrowers should compare alternatives before committing.
- Improving your credit health before applying and borrowing only what you can realistically repay helps mitigate the downsides.
Q: How does the application process work?
A: Applications are available online and require information like your income, employment, bank account, debts, and personal details. Approvals can occur in minutes to a few hours.
Q: What credit score is needed?
A: There are no minimum credit score requirements. Each lender sets their own eligibility standards but may approve borrowers with scores as low as 500.
Q: How quickly can I get the money?
A: Funding can be as fast as 1-2 business days after approval via direct deposit into your bank account.
Q: Can these loans improve my credit?
A: If you make your payments on time each month, responsible use of these loans can gradually rebuild your credit history and raise scores over the loan term.
Q: What happens if I miss a payment?
A: Late payments will incur fees and negatively impact your credit. Defaulting on the loan can lead to collections calls and potential legal action. Communicate with the lender early if struggling to pay.## Indicators of a Reputable Bad Credit Lender
With many lenders to choose from, it’s important to vet them thoroughly before submitting an application. Here are signs of a trustworthy direct lender:
- Licensed to operate in your state
- Secure website with encryption technology
- Positive borrower reviews and ratings
- Detailed list of fees and rates
- Customer service available by phone and email
- Does NOT require upfront fees before approving loans
- Reports to credit bureaus to help build credit history
Steer clear of lenders who seem deceptive, pushy, or make unrealistic promises. Take time to research and compare multiple options.
Estimating Your Interest Charges
Interest rates on short term loans for bad credit often range between 100-400% APR when calculated as annual percentage rates. But most borrowers don’t take a full year to repay these small loans.
You can estimate your total interest costs more accurately using the daily interest rate. Take the APR, divide by 365 to get the daily rate, then multiply by your loan term length in days.
200% APR / 365 days = 0.55% daily interest
For a $500 loan over 3 months (90 days):
0.55% x 90 days x $500 = $247.50 in interest charges
This provides a more realistic expectation than only looking at the high APRs.
Questions to Ask Your Potential Lender
Before accepting a loan offer, get clear on terms and conditions by asking questions like:
- Is there a prepayment penalty if I repay my loan early?
- How much are late fees if I miss a payment?
- Does the loan have a grace period if I need extra time for a payment?
- Can I get approved for another loan after I repay this one?
- How do I qualify for a lower interest rate in the future?
- Do you report loan payment information to credit bureaus?
Using Loan Funds Responsibly
Just because guaranteed approval loans are easily accessible does not mean they should be used lightly. Here are tips for responsible borrowing:
- Exhaust other options first like borrowing from family or selling assets.
- Only borrow what you absolutely need and can realistically repay.
- Have a plan to cover payments without taking another loan.
- Avoid unnecessary purchases and lifestyle inflation when funds arrive.
- Build savings for emergencies to avoid future high-interest debt.
Being wise with how you use the money can save on interest costs and prevent undesirable debt cycles.