A bad credit personal loan is a type of loan designed especially for people with bad credit record. Because, generally lenders do not provide loans to borrowers who have bad credit history. Bad credit history implies that the borrower defaulted in making payments or made late payments or simply payments terms and conditions have not been honoured by the borrower.

Now, there are lenders who offer bad credit personal loan even if you are a part owner of a property or even if you have bad credit to the extent that you missed a few payments on your current credit payments. A bad credit personal loan can also help the borrower to re-establish their credit rating.

Loan Amount & Interest Charged

Through a secured bad credit personal loan you can borrow upto 125% of the value of the asset you provided as collateral or upto 75,000, though the actual amount varies from lender to lender. The loan amount also depends upon the income level, and whether permanent source of income or temporary. Though the loan amount varies from lender to lender.

Cost of availing a bad credit personal loan, i.e. interest charged on loan again varies from lender to lender. It also depends on the profile of borrower in terms of his credit score, source of income, age etc. Therefore, key factors in interest rate are:

Variable interest rates

Monthly installment payments depend on loan amount and interest charged, therefore it is also variable.

Payment Duration

Usually duration for repayment ranges in between 5 years and 25 years. In this case, a borrower has two options:

First, to go for short duration of loan in which case the installment amount is usually higher but the hidden advantage is that the borrower can payback completely within a short span of time. In this case, cost of loan i.e. interest charged is comparatively lower.

Second, to go for longer payment duration, in which the installment amount becomes less compared to an installment for short duration loan. In this case, payment of a small sum every month becomes quite easy but such installment needs to be paid every month for a longer duration.

Use of Bad Credit Personal Loan

You have complete freedom to decide about the usage of the loan amount, once it is credited in your account. Whether you want to renovate your house or you are falling short of cash to buy a car, you can use this loan for anything and everything. In fact, at time borrowers use bad credit personal loan to pay credit card bill and reduce other debts to reduce their monthly outgoings to a more manageable amount