What is a Bad-Credit Loan?

A bad-credit loan is a loan made to a person who has credit that is considered poor and would likely be turned down for more conventional loans. These types of loans may be unsecured, short-term loans such as a payday loan or a bad-credit loan for a vehicle. In most cases, the terms for bad-credit loans do not favor the borrower. For those who find themselves in situations with poor credit, a bad-credit loan may seem like a good option. In most cases, no credit check will be required. However, with an increased risk to the lender for such personal loans comes an increase interest rate to the buyer. In other words, if the lender is going to put up money for what may be a bad loan, they will be demanding a more significant return on investment. For vehicles, a bad-credit loan works very similar to unsecured loans, except that instead of having no collateral, the vehicle is put up as collateral. In these cases, the terms may be very strict. Even one late payment may be grounds for ...  more