Bad Credit Loans: Possible

Creditors aren’t always concerned with credit as they mete out loan options, but the better creditors—those who won’t string you along for untold decades—are likely to pay close attention to credit. Meanwhile, the underhanded ones are willing to give anyone a loan, because they know that after they’ve done this, they own that individual.

The devil is in the details, and one of the most devilish details of any loan situation pertains to APR. APR is basically interest, and stands for Annual Percentage Rate. It works like this: you take out a loan for a certain amount, and there is a small percentage of that loan which is continually added. Sometimes you have a fixed rate, sometimes variable.

There are situations where interest compounds on the already increased sum, and situations where interest only compounds on the principle. Basically, the worst-case scenario as far as loans are concerned would be a variable-rate loan where interest compounds on the compounded sum.

Looking Into The Mechanics Of Interest

So if you had $10,000 with a 1% interest rate that compounds on the increased sum, one month would change the $10,000 to $10,100. Two months would change it to $10,201. Three months would change it to $10,303, etcetera. Slowly but surely, the principle is doubled upon.

Meanwhile, if you had a fixed rate on the principle at 1%, and it compounded monthly, you’d be looking at $10,100, $10,200, $10,300, etc. Thankfully, many loans don’t compound so quickly; but then, many do. Ideally, you want a loan situation where interest doesn’t kick in until you’ve had the loan for a few months.

If you can’t find that situation, your strategy should be to pay off interest as it compounds to at least keep your principle down until you can get to the point where you’re paying back the loan itself.

All these things being said, bad credit can be a real game changer, because it means the only loan options you have available to you are the absolute worst ones—those where the interest rate itself can increase as it compounds on your adjusted principle at a monthly rate. Still, you can get financial solutions with bad credit.

The Possibilities

According to LoansWithBad.Credit, how to get loans with bad credit and no job requires comparing and contrasting available options, and as the site points out, “bad credit is definitely something that lenders do not want to see.” However, that doesn’t’ mean there aren’t solutions. It just means before you sign on the dotted line, you’ll have to research.

You’ll need to realize that creditors willing to give a loan to an individual with no job and no credit understand that individual will never be able to pay it back, and so are basically stringing that individual along for several decades intentionally. It’s like floating a ten-thousand dollar bill over your head that, as a debt, never goes away.

So if you do end up taking out such a loan, you must always pay in more than your interest increases the principle sum. If interest is 1% on $10,000, you need to pay in at least $100 every time it compounds, otherwise your principle will continue to expand until it seems insurmountable.

Strategy

If you really want to get a loan paid off quickly, a wise solution is to pay as much as you possibly can within your budget as regularly as you possibly can. Doing this at $500 a month on a $10k loan would still take you about two years to pay off with interest. But it’s much better than ten to twenty years.