21 Oct 4 Tips For Getting A Loan With Bad Credit
It can be challenging getting a loan with a bad credit score. Those with bad credit are usually charged higher interest rates or get offered less favourable terms if they do secure a loan, making it harder to manage their debt. If you’re facing bad credit and struggling to get NZ loans, know this: with some smart financial moves, it is possible to boost your credit score, save money on interest charges, and improve your chances of being approved for your next loan. Check out these four tips for getting a loan with bad credit.
1. Improve your credit score
Your credit score is one of the most important factors determining how much you can borrow. It’s what lenders use to assess your creditworthiness – how likely you are to repay your loan. Generally, the higher your score, the more likely you are to get loan approval.
If you’ve missed a repayment, made late repayments or incurred defaults in the past, you may find your credit score has taken a knock, and it’s much harder for you to get your finance approved. Improving your credit score before you apply could help you access NZ loans with more favourable terms.
Try these tips for improving your credit score and keep in mind that building a good credit score takes time and patience. If you do need cash in a hurry, consider applying for an emergency loan through us. At Max Loans, we have helped many Kiwis secure emergency loans for a variety of reasons, including vehicle and house repairs, medical bills, funeral costs, and seasonal expenses (such as Christmas expenses). Unlike high interest loans (e.g. payday loans) which usually make a debt issue even worse, an emergency loan through us comes with fair rates and reasonable repayment terms, ensuring your long-term financial wellness. By paying off an emergency loan, you also demonstrate your ability to manage finances responsibly, which can help boost your credit score in the long run!
2. Apply for a secured loan
Secured loans – money borrowed against collateral – can help borrowers with bad credit access much-needed cash when they’re struggling to get loan approval. With secured loans, the lender carries less risk as the loan is secured by an asset. While applying for a secured loan is a great way to enable borrowers to obtain finance, it could mean the lender may repossess the collateral should the borrower default on the loan. If you are considering a secured loan, you should make sure you can comfortably afford the loan repayments while managing your other goals. If you need some expert advice on it, give us a call on 0800 ASK MAX (0800 275 629). As responsible Personal Lending Advisers, we will take the time to understand your unique circumstances and will only recommend a loan when it genuinely suits you.
By pledging an asset – such as a car, boat or property – the borrower may be able to secure financing with lower interest rates and/or more favourable terms. What’s more, secured loans can be used to pay for just about anything – from expensive appliances to a family getaway, unexpected medical bills, even a wedding. And the borrower is not limited to paying for just one thing – with cash in hand, they have complete control over how the loan is spent.
3. Have someone be a co-borrower or guarantor
Some lenders will approve a loan application with favourable interest rates for a borrower with bad credit who has a third party act as additional security for the loan. Having someone act as a co-borrower or guarantor could significantly improve your chances of loan approval if you have bad credit.
Applying for a loan with a co-borrower means that you and someone else are both responsible for paying it back. The lender can pursue either one of you to repay the debt should you default on your loan. Similar to a co-borrower, a guarantor is someone who is the lender’s last resort if the borrower defaults and will be responsible for repaying the loan should the borrower be unable to.
4. Work with a Personal Lending Adviser specialising in bad credit loans
When it comes to applying for a loan with bad credit, it’s best to work with a Personal Lending Adviser who is experienced at handling this type of lending. That way you won’t waste time applying with lenders that are more likely to decline your application, which could negatively impact your credit score.
At Max Loans, we work closely with a wide range of lenders that specialise in lending to bad credit borrowers. That means we can usually help you get a loan with fair rates and competitive terms even if you have an impaired credit history. If you have multiple debts to juggle, we may also be able to help consolidate your debts into one easy-to-manage loan with an overall lower interest rate to help you get on top of your repayments. Check out our step-by-step guide to getting your debt under control.
Get advice about bad credit loans
A bad credit loan could be just what you need to get your credit score back on track and help pay for those expenses you’re struggling to meet. To get advice about bad credit loans and to find out if bad credit loans are right for you, contact one of our Personal Lending Advisers at Max Loans today.
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