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How to Get a Bad Credit Loan Online

Choosing to apply for a bad credit loan online can open you up to a number of different interest rates and loan possibilities that you might not have thought were available to you otherwise. A number of lenders who would be willing to offer you this type of loan online are able to offer lower interest rates and more flexible loan terms to individuals who have had problems with their credit history, and by carefully comparing the different offerings of a variety of online lenders you might be able to find loans that are on par with those you might get if you had a much higher credit rating.

The keys to saving money with such a loan is the fact that it costs less to do business online so that lenders can pass some of that savings on to their customers and the use of high-value collateral to offset the risk of lending money to individuals with bad credit.

Using the right collateral

The first thing that you need to do is to choose the right collateral to guarantee repayment of your loan. While some online lenders may allow a number of different types of items to be used as collateral, a number of them require that very specific types of collateral are used.

One of the most common items to be required as collateral for a loan is the equity that you’ve built up in your home as you’ve been paying on your mortgage. The high value and relative ease of use makes equity perfect for online lending, and can be used to get you a good interest rate regardless of your credit history.

Finding online lenders

Of course, before you can apply for a loan online you’re going to have to find a lender to issue it. Use your preferred search engine to look for lenders on the internet, opening the various websites of a number of the lenders that you find so that you can compare some of their offerings.

Though you won’t know what type of interest rates and loan terms many of the lenders offer until you contact them, there is generally quite a bit of information that can be obtained simply by looking through a lender’s website. You may be able to eliminate some lenders from your search simply by reading through their terms of service or other information contained on the site.

Comparing loan offers

After you’ve found several lenders who may be willing to offer you a bad credit loan online, it’s time to begin collecting loan quotes and comparing the interest rates and other factors that each contains. Contact the various lenders that you’re considering, requesting an estimate of interest rates, monthly payments, loan terms, and fees that they might charge for a loan based upon your asking amount and collateral.

You can compare these estimated quotes to each other to determine which lender has the best loan for you and your financial needs, and which ones simply aren’t worth the cost or hassle that would be involved with using their loan products.

Bad Credit Loans – Are All Lenders The Same?

I was talking with a nice woman last week about buying a home after she and her husband had a foreclosure and her husband had filed for bankruptcy. She had met with a local real estate agent and the real estate agent had correctly suggested that they meet with a lender to find out about their ability to get a loan to buy a home. I usually do recommend meeting with at least one lender even if you are buying using one of the six main creative strategies that you still at least know what traditional financing you can qualify for now and what you will likely be able to qualify for with a little time and effort. Knowing as much as you can about your ability to borrow gives you a much stronger negotiating position and additional flexibility in what you can offer to the seller or accept from the seller with counter-offers.

In this particular case, the woman and her husband talked to the lender and the lender gave them some information about their ability to get a loan. The lender told them that they would be able to get a loan in the future with just a slight improvement in their credit score and the passage of a little more time since the bankruptcy filing. While not the best news, it was good information to have. Unfortunately, it was also taken as the final word about their situation.

One lender’s opinion about your ability to borrow is just that… one lender’s opinion.

It does not mean that you cannot get a loan from another lender. It does not mean that your credit score is not good enough to get a loan from a completely different lender. It does not mean that another lender would have different lending criteria relating to your bankruptcy, short sale or foreclosure.

The more lenders you speak with the more confident you can be on the options that are available to you, but unless you talk to every single possible lender you can not have 100% certainty. If you are looking for a good idea of the number of lenders to speak with before feeling like you’ve made a good try of it, consider talking to 12 lenders that have been referred or recommended to you by someone you already know, like and trust. This should take a full day of effort–a small price to pay for possible saving yourself thousands of dollars per year. If you are calling lending businesses from a public source like a phone directory or web based list, you should call 24 to feel like you’ve made a strong showing.

Not only does the criteria vary from lender to lender, but criteria to lend varies over time with the same lender. In January, a lender may not have any loan programs for borrowers with credit scores below 620. In February, the release a new loan program that caters to borrowers with credit scores below 620.

In conclusion, talking to one lender does not give you a comprehensive picture of what is entirely possible for you. It gives you one lender’s opinion of what they can do for you based on their current lending criteria. The more lenders you speak with and get opinions from the more confident you can be in having correctly evaluated your options, but no matter how many you speak with you can still run into the one exception that may have a program were they are willing to work with you.

Do You Understand Mortgages For Bad Credit? Test Yourself

Do you really understand what it takes to acquire real estate financing, especially when you have a not-so-spectacular credit score? Take the following quiz and see how you rate.

Question One
When it comes to truth-in-lending laws, what are the disclosures a lender must make when processing a mortgage for bad credit loan?
(a) The length of the mortgage
(b) The current market index rate
(c) Your loan-to-debt ratio
(d) All costs of the loan

Answer: (d) All the costs of the loan. When you apply for any of the mortgages for people with bad credit, the lender must disclose all costs associated with the loan. These include the APR or annual percentage rate, any service charges, appraisal fees, survey costs, attorney’s fees and costs attributed to title and escrow fees.

Question Two
Certain ARMs or adjustable rate mortgages offer the flexibility to convert the loan to a fixed-rate type of mortgage on the anniversary date of the origination of the loan. This is offered typically within what amount of time?
(a) One year
(b) Ten years
(c) Six months
(d) Five years

Answer: (d) Five years.

Question Three
Which of the following situations is the best type of condition for securing mortgage loans for bad credit?
(a) When you can pay for the loan with a down payment
(b) When your credit card payments are below their limits
(c) In a “seller’s market”
(d) In a “buyer’s market”

Answer: (d) In a “buyer’s market.” In this type of market, you have the opportunity of usually buying a house at around 20% below its normal asking price. Therefore, you have a lot of room to negotiate as well as easily procure the services of any of the mortgage lenders for bad credit who secure mortgage loans for people with bad credit.

Question Four
What is the major advantage of obtaining a 15-year adjustable rate mortgage (ARM) over the same type of mortgage for bad credit loan for 30 years?
(a) The term for repayment can be extended
(b) It has a 2% annual cap
(c) More of the principal is paid each month reducing the interest costs over the loan’s life
(d) More of the interest is paid each month to pay off the loan

Answer: (c) With a 15-year mortgage, your monthly payment is more because you’re paying a greater amount of the principal. Therefore, your interest costs are reduced.

Question Five
Generally, how long does it take for most mortgages for bad credit to close?
(a) One month
(b) Five days
(c) One week
(d) Two weeks

Answer: (d) Two weeks. Generally, these types of loans can take, on average, a couple weeks to close.

Question Six
What is another name for mortgage lenders for bad credit?
(a) Traditional lenders
(b) Secured loan lenders
(c) Sub-prime lenders
(d) Bankers
Answer: (c) Bad credit lenders are also referred to as sub-prime lenders. If you obtain a loan from this type of lender, you are known as a sub-prime borrower.

How did you do? The more information you have, the more prepared you will be when shopping for a bad credit loan. The Internet can give your further information and resources if you’re looking for mortgages for bad credt.