But what if you are on the opposite of the road, you have not been serving your mortgage loan on time, you had been defaulting your credit card payment for months, you care classified as bad credit rating and the chances that you are getting a loan is very low and even you may successfully get one, you loan amount will certainly low and tag with very high interest. This is because the financial institution finds it risky doing business with you.

So how to get loan with bad credit ?

One of the easiest and faster method is seek help from a debt consolidation company. Online debt consolidation companies have made the process easier now, and helping individual secure simpler monthly payments along with lower interest rates on their debt. If you are under debt and want to find some relief, there are several options that may be available to you.

But the most basic thing you should do is to find out what caused you a bad credit rating. It could have been just a simple unreported finance charges that you are not aware of, a quick fix by paying off the small amount will get your out of the bad credit category.

The cheapest unsecured personal loan lies on the interest charged, processing fees or administration fees and others term and condition.

Let’s break it down to different parts.

1)     Interest Rate : the lower the interest rate the cheaper the loan repayment.

2)     Fees : please check with the respective finance companies on what are the fees that you need to pay, such as processing fees, administration fees, stamping fees etc etc

3)     Others term and condition : Any early settlement fees if you decided to repay your loan earlier ?

I strongly suggest you to go for online comparison to check out the cheapest unsecured loan available to you.

First, you have to decide the loan amount. Let say $10,000.00, secondly the repayment period, let say 36 months or 3 years. 

Then prepare the following template:

Loan amount : $10,000

Repayment Period : 36 months

Co.  Interest Rate    Monthly Payment   Fees   Total Payment

 A           10%                        $361                $100         $13,100

 B              9%                        $353                $250         $12,950

 C             12%                      $378               $0                $13,600

Visit the financial company Website that is available for you, use their finance calculator to work out the monthly payment, please do call to find out what are the fees that you need to pay.

Fill up the template above and you will be able to find out which finance company provides you the cheaper unsecured personal loan.

Secured personal loan means you need to put collateral such as a real estate to the financial institution in return for a sum of money usually value up to 80% of the asset value.  The procedure is pretty straight forward and usually the approval is almost certained as long as the asset has not been mortgage to another financial institution.

Since you have an asset pledge to the financial institution as collateral, the interest rate is usually favorable to you.  But the drawback is, if you do not pay your installment on time, you are risking the ownership of the asset.  That means the financial institution has the rights to take over the asset and resell it to the public via auction to regain the amount of money loan to you. 

If the amount of money collect via the auction sale is not able to settle the loan outstanding, you are still liable to pay the remaining sum.  So this is the biggest risk of taking a secured personal loan.

On the other hand, if you are taking an unsecured personal loan, you will not need to put any asset as collateral, but the drawback is you need to pay much higher interest rate as compare to secured personal loan and the loan amount is very much lower, usually an unsecured personal loan amount is less than $20,000.00.

Secured loan vs Unsecured loan, each having advantage and disadvantage. 

You may want to consider others alternative before apply for a personal loan.

However, most financial institution will imposed early settlement penalty if you decided to settle the loan before the maturity date.

Please check with your lender about the early settlement penalty fees before making your decision, especially if you think of getting another personal loan with more attractive interest rate to settle the existing loan.

In any situation, it is a good sign that you are able to settle your personal loan earlier than expected.

The advantage of using credit card is you don’t need to go through the application process and the approval is guarantee up to the credit limit that you have.  If the merchant does not have an interest free installment plan, the disadvantage of using credit loan is paying higher interest rate than personal loan.

If you plan to get a personal loan for others purpose, such as going for holiday, repay your existing loan, paying debts due to friend or business associate, then you might consider selling off some of the unused items at home.  Try eBay or having garage sales will be a good to get rid of some old junks and get some fast cash to serve your needs.  The most popular items are electronics gadget and jewelry.

   – 18 years old and above

   – Citizen with a banking account

   – Employed for the last 6 months

   – Minimum Salary of $1000

   – Other requirements may apply

In certain circumstances, even you are having a bad credit rating, you are still entitle for personal loan, but be prepared to pay higher interest, lower loan amount and shorter loan period.

The terms and conditions may varies from each financial institution, please check with the respective office before submit your application.

It is always recommended to submit a few applications, you may or may not need to accept any offer from the bank.

Please take note that the time took to approve your personal loan largely depends on your credit rating. If you credit rating is in good shape, no bad record on defaulting credit card payment and mortgage, you might be able to get your loan approve in hours and get in money in less than 2 working days.

Generally the loan amount of a personal loan depending on your current financial status and your capability to repay the monthly installment.

The amount of loan depending on a few factors:

-          Your current Income – the higher your income, the higher your loan amount.

-          Your current expenses and loan commitment ( credit card, mortgage, car loan, others personal loan.

-          Your credit rating – the lower your credit rating, the lower the loan amount.

-          Loan Tenure – The longer the loan tenure, the higher the loan amount.

Check out the website of the financial institution that offer personal loan, usually they provide a personal loan calculator to work out the eligible loan for you.  

Just fill up the form which usually including your current income, numbers of dependent, your current loan, mortgage, and the period of the loan. You will get your entitled loan amount immediately.

If you are bankrupt or having a bad payment record in your credit card or mortgage, it will be difficult to secure a personal loan as the bank sees this as high rick business transaction.  Even if you may get it, be prepared to pay high interest rate and the loan amount will be very low.

Characteristics of Personal Loan

-          No Collateral Needed – you don’t need to pledge your asset to the bank

-          High Interest – higher then housing loan but less than credit card advance

-          Short Repayment Term – usually less than 3 years

-          Low Loan Amount – loan amount depending on your salary earned.

-          Interest are not Tax deductable – unlike your housing loan, interest is tax deductable.