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You may worry that because you have a bad credit score, you will be unable to borrow any form of short-term loan that could help to tide you over in a period of financial difficulty. However, do not fear as even those with poor credit ratings may be able to acquire a type of short-term loan.

There are bad credit loan options available which may be suitable for someone with a bad credit score. These types of loans require specific terms and eligibility to be met if applied for. Keep reading to find out how you could get a short term loan with a bad credit score.

What Loans Can I Get With A Bad Credit Score?

It is possible to get a short term loan with a bad credit score. However, as these loans do not consider a person’s credit, they will demand other requirements to be met by those who withdraw them.

For example, loans that do not require a good credit score may instead come with high borrowing costs or collateral. Collateral is used for secured short term loans, and requires the borrower to pledge an asset, like a car, in order to borrow the money.

Examples of such personal loans that can be borrowed with bad credit include:

  • Title Loan – A title loan is a type of secured loan and is when a borrower puts up an asset as collateral for their financing. Secured loans sometimes do not require good credit as you give an asset as collateral for the loan. A common type of secured loan is a car title loan – a short-term loan in which the borrower pledges their car as collateral.
  • Payday Loan – Whilst a payday loan can be taken out over a long period, it typically has a term of around a month. Payday loans are short-term loans that typically offer smaller amounts of money but at very high interest.
  • Unsecured Personal Loan – You may be able to acquire an unsecured personal loan without having to secure it with any high-value assets.
  • No Credit Check Loan – Most legitimate and regulated lenders will always check your credit score before releasing any funds. However, it is also possible to apply for a loan that does not require any credit check to be undertaken at all. For people with very poor credit, finding a lender that does not perform credit checks may be the last chance they have at borrowing money.

What Do Short-Term Bad Credit Loans Require? 

So, whilst there are a few loan options for those who have bad credit, unfortunately short-term bad credit loans may come with other strings attached.

To begin with, short-term bad credit loans tend to be more expensive. You will usually pay a much higher annual percentage rate (APR) for these loans, which can actually make them even more pricey than most longer-term forms of borrowing. You may face higher interest rates because, if you have a history of bad credit, you will appear as a much more risky bet to lenders.Having a poor credit score indicates that you are not good at repaying your debts. This prompts lenders to charge far more for their lending to ensure that they get their money back from people they deem to be high-risk borrowers.

As having a bad credit history makes you a risky bet to lend to, this is also why some short-term bad credit loans require an asset as a form of collateral. It is given with the understanding that if you do not make the full repayment, your asset can be taken by your lender. By charging high interest and demanding the provision of collateral, lenders made loaning to someone with poor credit worth their while. Otherwise, loaning to someone with a bad credit score may simply be considered as just too risky.

Are Short-Term Bad Credit Loans A Good Idea? 

Whether a short-term loan is good for you will depend on your personal circumstances. It is important to keep in mind that bad credit short term loans may come with high interest. So, if the loan is not repaid late penalty fees and further interest may accumulate. Likewise, a bad credit loan may require collateral. If you do not feel comfortable with this, then consider alternative options.

Indeed, these loans can be useful to those who need some quick emergency cash and cannot get it from elsewhere. Regular banks and many other lenders will not consider lending to someone with a bad credit history and so, if you urgently need money, bad credit loans may help. They are relatively easy to apply for and can ensure funds are quickly transferred into your account.

However, short-term loans do not give you much time to repay your loan, and their high levels of interest may be difficult to manage for some borrowers. Therefore, it can be very easy to fall victim to predatory lending with bad credit loans if you are not careful. Before applying for a bad credit loan, check that the lender or loan connection service is regulated. By doing so, you will be given fair and affordable rates.

Alice Busvine

Alice is a writer focusing on consumer and lending practices throughout the USA.