May 18, 2022

How to Get Approved for High Risk Personal Loans with Direct Lenders

A high risk loan is a loan that poses more risk to a lender who chooses to extend credit to someone with a low credit score, also known as a “high-risk borrower”. These borrowers typically don’t have a strong debt repayment history, tend to keep their credit card balances close to their limits, or have limited credit histories, making them more likely to default on a loan.

Therefore, a high-risk loan is a subprime loan offered to these high-risk borrowers. These loans can have double or even triple digit interest rates, which are in place to mitigate the risk of lending to people with bad credit. If the loan is not repaid, the interest paid on the loan will be used to reduce the lender’s losses.

For these reasons, before applying for any of these high-risk loans, it’s crucial to understand what you’re getting yourself into.

risk meter and hand pointing high risk

Why do people choose to get high risk loans?

Generally, high-risk loans are considered unsecured loans, which means that you are not required to provide any security or collateral to the lender to obtain this loan, such as valuables, property, assets, cars or a house. Often people need a loan but get turned down everywhere and seek help.

However, to balance the lender’s risk, these unsecured loans will usually charge a high interest rate, which if you do not repay on time or fail to repay the loan, you may find yourself in debt. important and a damaged credit rating. That’s why before you take out a high-risk personal loan (even with guaranteed approval from direct lenders) you need to make sure you understand the terms of that loan and are prepared to handle those interest rates. higher.

Yet, although these high-risk loans come with many stringent conditions, they can often be a boon for many. For example, when someone is facing an immediate financial crisis, a high-risk loan can be a respite for a high-risk borrower, especially in an emergency, such as when faced with a medical problem, to a sudden household problem, motor vehicle repairs or an overdue credit card bill.

couple reading documents

Another common reason individuals take out a high-risk personal loan is to help straighten out their finances. Even though these loans often come with a much higher interest rate, when individuals adhere to a strict repayment plan, these loans can help them consolidate their debts and improve their credit scores. In fact, on-time payments can count up to 35% a person’s credit score.

What are the easiest loans to get when you have bad credit (400-500)?

notepad with credit history written on it

If your credit is poor, like in the 400s and 500s, some loans are easier to get than others. For example:

  • A home equity line of credit (HELOC) loan: These loans use your home as collateral instead of focusing on your credit score. Therefore, your loan will be based on the equity in your home.
  • Loans secured by a co-signer: If you apply for a loan secured by a co-signer, who has excellent credit, you will have a better chance of getting loan approval.
  • An unsecured personal loan: Although unsecured personal loans tend to be based on your creditworthiness, some unsecured personal loans are available for those with poor credit. There may even be high-risk personal loans with no credit check.

Companies that offer the best high-risk loans for bad credit (or even without checking it)

man on a call checking computer

If you’re considering a high-risk personal loan but don’t know where to start, or if you need a loan but have been turned down everywhere, we’ve prepared a list of some companies below. which may be worth consulting when trying to obtain one of these loans.

Mutual money

Mutual money

Money Mutual is often one of the best companies for high-risk loans, especially because they often offer pleasant repayment terms. The company offers cash advances between $200 and $5,000, with these amounts being credited to your account within 24 hours. All you have to do to get this loan is submit your file to them and let them look into what happened with your credit score.

Advantages
  • With Money Mutual, it doesn’t matter how high your score is; The company will help you with your high-risk loan; Best of all, you won’t have to worry about unsecured loans which are often difficult to manage in the future as Money Mutual is the one who will give you money through their escrow system
The inconvenients
  • When it comes to their annual percentage rate (APR) and length of tenure, you won’t be able to get a good idea of ​​their averages, as these are based on a case-by-case basis.

Loans for bad credit

Loans for bad credit

Bad Credit Loans offers many options for individuals to borrow secured loans, regardless of their credit history. Typically, you’ll be able to borrow between $500 and $10,000 by simply providing basic information, such as your date of birth, your four-digit Social Security number, and your zip code. The company then uses this information to decide if you can get a loan.

Advantages
  • The company won’t use your credit score to decide if you qualify for a loan, making it one of the high-risk loans for those with bad credit.
The inconvenients
  • Their interest rates are relatively high, reaching 35.99%; In addition, the company charges a fee for its services

PickALender

PickALender

When you use PickALender to secure your high-risk loan, you’ll find they have a simple process that will help you secure a loan between $100 and $40,000. After filling out a simple form, the company will decide if you qualify for a loan regardless of your credit score.

Advantages
  • The repayment terms are easy to understand and are presented transparently, so there will be no confusion regarding your loan options and repayment criteria.
The inconvenients
  • If you’re looking to plan ahead, the company doesn’t provide specific APRs or loan terms; This means that to find out the details of these loans, you will need to speak to a representative for more information.

CashUSA

CashUSA

CashUSA is a great option for those looking to get money from a reliable lender with lower origination fees and low interest rates.

Advantages
  • The company offers loans ranging from $500 to $10,000 and often provides a loan decision within minutes; Even better, the company can put these funds directly into your bank without needing to know the purpose of the loan or your credit score.
The inconvenients
  • Interest rates can reach 35.99%, which can become a problem for some borrowers

Personal loans

Personal loans

If you’re looking for a company that will give you a loan when you have very bad credit, PersonalLoans is considered by many to be a great option. The company is known for providing loans at affordable interest rates while connecting you with many lenders who don’t care about your credit history.

Advantages
  • When you work with the company, you can review the repayment terms yourself and determine which plan is the best option for you; Typically, you’ll be able to borrow between $500 and $35,000 from lenders who won’t scrutinize your background.
The inconvenients
  • PersonalLoans charges you an origination fee and under certain circumstances interest rates can be as high as 35.99%; This is why it is important to carefully review the loan conditions

loan tree

loan tree

Lending Tree can help you find personal lenders who can give you loans ranging from $1,000 to $50,000 and rates as low as 2.49% APR.

Advantages
  • When you work with the company, not only will you find that the website is easy to understand and the paperwork is simple to complete, but the response time is fast, allowing you to get your money fast.
The inconvenients
  • Interest rates can reach 35.99%, depending on the loan; It is also important to note that some lenders will not provide loans to individuals in certain states, they may look into the reason for such loans and charge high origination fees.

Alternatives to a high-risk loan

woman and man checking bills

Sometimes getting a high-risk loan may not be in your best interest. In some cases, depending on the circumstances, you may want to consider an alternative to a high-risk loan, which may include:

  • Focus on your credit cards: If you don’t qualify for a consolidation loan with an interest rate lower than your APR on your credit cards, you might want to consider focusing on the credit cards themselves if you can. allow minimum card payments.
  • Debt management plan: You may want to consider a Debt Management Plan (DMP) through a nonprofit credit counselor who can help lower your interest rate and consolidate all your monthly payments into one. only. However, you should note that a DMP can negatively impact your credit score because when you enter the plan, you usually have to close all of your accounts.
  • Credit advice: Credit counseling is a free service offered by non-profit organizations, where a certified counselor can help you develop a plan to help you out of your financial troubles based on your personal situation.

You can also read: 24-Month Interest-Free Credit Cards: Best Options

The Bottom Line: Make sure you do your research before taking out a high-risk personal loan

woman saving money in piggy bank

While the high-risk personal loan can help individuals with their credit score and allow them to secure the money they need when they are in need, there are a lot of risks involved in taking out these loans. That’s why, before you decide to go this route for your financial needs, be sure to take your time and research all of your options to find out how this loan will affect your credit and overall financial health.

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