It’s challenging to borrow with bad credit. It’s tough to get it approved by a lender, and if it gets approved, you’ll have to pay a higher interest rate. Sometimes, private loans are viable alternatives to traditional loans if you have bad credit. All you need to know is how and where to borrow it from. This article discusses both.
Obtained through a private lender, these loans fall in either of these two categories:
- Student Loan
- Loan borrowed from a non-institutionalized lender (Not a credit union or a bank)
Private lenders don’t have stringent regulatory standards like that of traditional lenders. Therefore, they are an easy option for people with bad credit to secure a favorable loan (less paperwork) with flexible terms (short repayment period).
If you’re getting a student loan, you’ll have two kinds of loans that you can apply for: private and federal loans.
In this regard, a federal loan is the best option if you have bad credit because they don’t run a credit check and offer a fixed interest rate based on an income-driven plan. Since there’s a limit on how much you can borrow for an academic year, a private loan will be better for you if you want to borrow more money.
Students usually don’t have a credit history or income, making it hard for banks to get surety of loan repayment. However, they may have some luck acquiring a private loan from a credit union or a community bank.
If they want to go for a private lender, they’ll have to apply for it directly via the bank and go through a credit check. If you feel that your credit reports aren’t up to the mark, apply for a loan from a financially sound cosigner.
You can apply for a loan from a state-affiliated organization. The loan benefits, like delayed interest, low rate, and grace period, vary based on the type of loan. For this, you’ll have to apply via a state agency directly, and you may be asked to show your financial need and enrollment status.
Acquiring Private Student Loans From Non-Institutionalized Lenders
P2P lenders connect borrowers and investors through online platforms. They provide business and personal loans. As they handle all the loan process aspects, borrowers and investors don’t have to meet. Even if your credit is spotty, P2P lenders will enable you to borrow.
You can take these loans from a family member or a friend. The advantage of this loan is that you can secure it with bad credit, get a low-interest rate, and extend the repayment terms based on your financial conditions. To ensure that you don’t ruin your relationships, begin with an honest conversation and layout all the terms in writing.
Want to Apply for a Private Loan?
GCP Fund can help you. They provide private loan services for investors and businesses across Allentown, Philadelphia, and Pittsburg, PA. Their services offer quick financial solutions in cash-strapped conditions. They also provide bridge financing, asset-based lending, construction financing, and commercial financing options for their clients. Get in touch with them to know more.