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Personal Loans For People With Bad Credit: How to Get More Than $5,000

The need for a cash injection is not exclusive to people with poor credit ratings. Everyone can do with a few thousand extra in their wallets, whether to pay for college fees, clear a credit card debt or pay for a vacation. The problem is when the sum needed gets lenders nervous. But personal loans for people with bad credit solve that problem.

There can be any number of reasons behind the need of a relatively large sum of money – more than $5,000, for example. But an applicant must show that they can afford the loan, and meet repayments. Only then will a lender feel confident and getting loan approval become a strong possibility.

While it is true that traditional lenders typically set poor terms for bad credit borrowers, there is a variety of alternative lending options open to providing a sum of $5,000 or more. Indeed, even large personal loans can be accommodated, and at affordable terms.

Students Have Lending Options

Paying college tuition fees and living expenses can be a huge challenge for the college-goer. In fact, students are always in need of extra funds to finance college living. With no income, it can be very hard to get the funding necessary. Thankfully, there are personal loans for people with bad credit specifically designed for students.

These loans allow students to pay their fees and keep themselves housed and fed, but without burdening them with immediate repayments. In fact, repayments are delayed until after graduation. Also, getting loan approval is pretty easy once the applicant proves he or she is a student and is in need of financial assistance.

But like any large personal loan, the debt will need to be paid eventually. Once graduation comes, the pressure to pay begins – though it is possible to refinance these loans if the pressure is too much.

Family Financing

As personal loans for people with bad credit go, the best loan option is often closer to home. Approaching a member of the family for a loan can provide the most cost-effective solution to the need for extra cash. Usually approval is all but certain, with the only concern being whether or not a family member has the money on hand to lend.

Of course, getting loan approval is not the only concern, with family members still expecting the loan to be repaid. This means a repayment schedule will need to be agreed and signed up to, ensuring there is no confusion over the issue. And because it is a family loan, there is often no interest charged on the deal.

Still, this kind of loan does rest on the idea that a family member has the funds to spare. Perhaps $5,000 is no big deal, but large personal loans can sometimes be too much for them to source.

Payday Loans

In terms of interest rates and loan limits, payday loans are not the best option. But there is no denying that as a source of fast emergency funds, they are hard to beat. They are also arguably the most accessible personal loan for people with bad credit, with credit scores ignored and approval resting on income only.

However, besides the very high interest rates that are usually charged (sometimes 35%), they are also limited to $1,500. This means they are not enough to handle any major debts. A series of loans may be necessary to make up the required sum, but getting loan approval on so many deals can prove very expensive.

It may be possible to get a larger sum, and repay over a 90-day period rather than the normal 30-day term. However, this is also likely to be very expensive. And with no large personal loan available, applicants only have the speed of this option to fall back on.

Some Student Loans For Parents With Bad Credit To Consider

Parents take a certain amount of pride in seeing a son or daughter head off to begin their college careers. But there is also a degree of concern, especially financial, as the costs of a college education can be extremely high. That is why student loans, for parents with bad credit especially, are a vital component in tertiary education.

But what are the options open to parents that cannot afford to pay for tuition and living expenses? Aiding student financing is a grand idea, but can they qualify for the programs that matter? These are just two of the questions that come to mind. The good news, however, is that there are plenty of financing options out there.

Here, we look at three of them, from the Stafford Loan that is so popular, to the PLUS Loan that keeps the financial pressure off the student, to being a cosigner to ensure approval of the student loan is granted.

Consider a Stafford Loan

One of the most popular forms of financial aid amongst students is the Stafford Loan program, which provides funding to students who are from families unable to fully support their child in college. It is a hugely successful student loan, for parents with bad credit especially, as they may struggle to finance it themselves.

Stafford Loans are available at a lower interest rate than private loans. This means the overall costs are kept very low. Repayment is deferred until 6 months after graduation, ensuring the student has time to try to find a reliable source of income with which to repay the loan.

Many parents aiding student financing know they must allow the students to accept responsibility for the Stafford Loan, but frequently make the repayments themselves. However, there are strict limits relating to the sum of money borrowed, and the eligibility of the applicants. These student loans are only available to those in need of financial help.

Consider a PLUS Loan

When students find themselves ineligible for federal loans and private loans, it is possible to secure a PLUS loan on behalf of your own child. However, there are conditions to securing these student loans for parents, with bad credit a key one.

The PLUS Loan diverts financial responsibility away from the student, so the parent takes on the commitment completely. The funds can be used to cover both tuition fees and living expenses. Interest is charged on the loan at a lower rate than normal, between 7% and 8%, and is repaid over an agreed period of time in equal amounts.

However, aiding student financing in this way is dependent on the applicant having a good credit history. Recent bankruptcy rulings or loan defaults can mean the loan will not be granted. Also, if other forms of financial aid are secured, then the size of the PLUS student loan will be reduced.

Cosigning Student Loans

Finally, acting as a cosigner on a loan application can be a hugely effective way to secure a student loan. For parents with bad credit, there may be a problem, since their role as cosigner is only acceptable if they have good credit scores and a reliable source of income.

Still, if your own signature is not enough, then look to a family friend or relative that might more suitably fit the bill. Remember, a cosigner only promises to make monthly repayments when the borrower is unable to, effectively aiding student financing as a backup rather than by being the main payer.

Also, the student remains the key borrower, so if the student loan is defaulted upon – even if it is because the cosigner has failed to make the repayment – then it is the student that suffers the consequences. Their credit rating plummets, and their future loan applications become in doubt.