4 pros and cons of personal loans for bad credit

4 pros and cons of personal loans for bad credit

Origination fee: You’re more likely to come across this fee if you’re dealing with an online lender, and it’s usually calculated as a percentage of your loan to cover the costs of processing or underwriting your loan.

Prepayment penalty fee: While it may seem like a good thing to pay back your personal loan early, some lenders charge a fee for doing this. That’s because they make less money in interest when you repay your loan early.

Returned check fee: If your payment doesn’t go through because you have insufficient funds in your bank account or you bounce a check, you may run into a returned check fee. This is typically a flat amount.

Every financial product comes with advantages and disadvantages, so it’s important to weigh the benefits against the costs to determine if a personal loan is good for your needs. Here are some pros and cons to consider when it comes to personal loans for bad credit.

Cons

If a bad credit personal loan is too expensive, it can make it harder to pay all your bills on time

Tips for comparison shopping for a personal loan

When shopping for a personal loan, it can be helpful to compare multiple offers to make sure you’re not overspending. To comparison shop for loans, you should request loan estimates from multiple lenders and then compare the estimates by looking at how much you’ll pay in fees, what your repayment terms are, what the rate type is (adjustable or fixed), and how high your APR will be.

It’s especially important to compare APRs because the APR combines your interest rate, repayment term, and fees, which gives you a clearer picture of which loan is the best offer for your situation. The e as the interest rate, which is a single component of the APR.

Steps to get a personal loan with bad credit

If you’re approved, you may gain access to your funds as soon as the next day, depending on the lender. Read More