Secured Loans for Bad Credit
If you have bad credit but need quick funds to cover expenses, secured loans should be on your radar. With a secured loan, you’ll need to offer up collateral or something valuable that you own. Here’s a closer look at secured loans for bad credit and how they work.
How do secured loans work?
Secured loans are backed by collateral or assets that you own, like a house or car. When you apply for a secured loan, the lender will ask you what type of collateral you’d like to secure. In the event you default on your loan, the lender has the right to seize your collateral. While a collateral requires you to put an asset on the line, it can help you get approved for a loan with favorable rates and terms, even if you have bad credit.
Can I get a secured loan with bad credit?
Since collateral loans are less risky for lenders, they usually come with less strict requirements. This means if you have bad credit, you can still qualify for a secured loan. During the approval decision process, lenders will consider other factors in addition to your credit score, like your collateral, debt-to-income ratio, and employment situation.
How do secured loans affect your credit?
There are a few ways secured loans can affect your credit. When you first apply for one, a lender will likely do a hard credit inquiry, which may slightly decrease your score temporarily. But if you get approved and make consistent on-time payments, you can boost your credit.
How to apply for a secured loan for bad credit
To apply for a secured loan with bad credit, follow these steps:
1. Compare lenders
Not all secured loans for bad credit are created equal. Shop around and explore your options. Compare interest rates, terms, fees, and perks so you can choose the right loan for your unique situation.
2. Choose a secured loan option
Once you’ve done your research, decide on a secured loan. Be sure you can afford to repay the loan you choose so you can avoid losing your collateral.
3. Fill out an application
Next, fill out the application for a secured loan in store or online from the comfort of your home. Before you submit your application, review it for accuracy to avoid delays with approval and funding.
4. Wait for approval
After you submit your application, you’ll need to wait for approval. Fortunately, many paycheck loan lenders offer quick approval decisions and may approve you instantly, so you won’t have to wait days or weeks.
5. Receive your funds
Depending on the secured loan you chose, you may receive your money via direct deposit, prepaid card, or check. Most lenders will let you choose your preferred funding option, and you may get the money the same day you apply or within 24 hours.
Is a secured loan for bad credit right for me?
If you need to cover an expense but don’t have the cash on hand, a secured loan for bad credit might make sense. This is particularly true if you’ve had trouble qualifying for unsecured loans because of your low credit score. Just make sure you’re comfortable putting an asset on the line and feel confident you’ll be able to make your payments.
What you’ll need to qualify for a personal loan with collateral
While every lender is different, many require the following when you apply for a personal loan with collateral:
- Collateral: This may be a house, car, savings account, piece of jewelry, or anything else of value.
- Government ID: Most lenders ask for one or two forms of ID, like a driver’s license, passport, birth certificate, or Social Security card.
- Proof of income: Since lenders often have minimum income requirements, you may need to provide pay stubs, bank statements, and tax returns.
- Proof of address: A proof of address is a document with your full name and address, such as a utility bill, leaves statement, or voter registration card. Some lenders might use it to verify where you live.
Advance America offers secured loans for bad credit
Advance America offers title loans that can allow you to receive your funds the same day you apply, even if you don’t have great credit. All you have to do is fill out an online application form and visit a nearby Advance America location to get your vehicle appraised. Your loan amount will be based on your car’s value, and you’ll be able to drive your vehicle as you repay your loan. Visit Advance America to learn more about our title loans and apply today.