How to Get a Loan With Poor Credit – What to Know

October 03, 2019

For most people, having a poor credit score can signify a barrier to applying for various loans, ranging from in-bank and online choices. Although a majority of poor credit score owners lament over not being able to get the best possible loans available to the public, most of them are unaware of an option that they can easily avail of—sub-prime loans. 

Generally, sub-prime loans are taken out for a wide variety of reasons, ranging from car payments to medical bills. Often, sub-prime loans are discovered through different types of quotations, such as car loans and housing loan quotations, which are also accompanied by varying monthly payments. Nowadays, lenders and modern banks have been able to provide sub-prime loans for major investments and highly-priced purposes.

Is there a catch when it comes to sub-prime loans?

There’s no catch when it comes to getting a sub-prime loan with a significantly lower credit score. The reason that sub-prime loans are so effective yet accessible is that they’re offered in varying purposes that can be easily monitored by a lender or a loan provider. Compared to a traditional bank loan that has an “anything goes, spend whatever you want” approach, sub-prime loans come in various forms, ranging from auto loans to housing loans that are available for those with bad credit. 

The advantages of getting a sub-prime loan

Sub-prime loans are generally a win-win situation for both lender and borrower. For borrowers, sub-prime loans are advantageous because of the following: 

  • Easier processes for application
  • No collateral (however, this is replaced with a repossession clause)
  • Higher approval rates for those with subpar credit scores
  • A wide range of options, rates, and payback periods

On the other hand, lenders benefit from sub-prime loans because it is an opportunity for them to make a significant amount of money easily. Most borrowers that have sub-prime loans end up paying much more than what they’re borrowing, leading to significant profit margins that help keep a loan service business running. 

The disadvantages of getting a sub-prime loan

It’s best to assume that sub-prime loans are not without their own set of risks for the borrowers that apply for them. Unsecured personal sub-prime loans for those with poor credit scores generally hold higher interest rates as compared to secured loans, creating either longer payback periods or higher monthly payments. However, aside from higher interest rates, sub-prime loans are still a better option for those with lower credit scores and are in need of an extra financial boost. 

Sub-prime loans are an option that every person with poor credit scores should consider, especially when it comes to making major steps and investments in life. Through a dedicated loan provider, almost anything can be financed with a sub-prime loan that has a quick application process. If you’re looking for the perfect loan option that can help you get back on your feet after a few financial blunders, then your best bet is a sub-prime loan. 

If you’re in South Africa and want to take out a personal loan at affordable rates, feel free to contact Hoopla Loans today to see what we can do for you!