Are unsecured loans for people with bad credit possible? The fact is, that they are, although some of the types of loans that you will quality for will have ridiculous interest rates and you’ll want to avoid them at all costs. However, we’ll go over the options that are generally available to people that have poor credit so that you at least know what is out there and can make an informed decision about whether or not you want to pursue getting a loan with bad credit or if you would rather wait until your credit is better or get the loan from a friend or family member that won’t charge you the interest.

Unsecured personal loans for people with bad credit are generally impossible to get from a bank or finance company. However, you can often get secured loans from a bank, secured by things of value that you own and you’d be surprised what they will take as collateral. What you need to understand is that banks and finance companies want to lend you money, they just don’t want to take the chance of losing money, and if you can show that you will pay it back, either with a good credit history or with something of value to secure the loan with, then you may be able to get the loan that you need.

One type of personal unsecured loans for people with bad credit is the payday loan. This type of loan is one of the high interest rate loans that I was talking about. They charge about the maximum amount of interest that is allowed by law which can be as much as four hundred percent. That means that on a loan of just a few hundred dollars you could pay around fifty bucks in interest for a very short term loan, such as until your next payday which is what the loan is intended for. This type of loan is done with a check, and is just until your next payday, upon which you can pay it off in full or just pay the interest and forward it until your next payday.

Another type of unsecured loan for people with bad credit is the title loan. Although not technically unsecured it may be as close as you can get for some people. A title loan allows you to keep your car and continue driving it as usual, but the finance company keeps your car title, and seizes your car if you  don’t pay the loan off or if you miss too many payments. They will generally offer you about eighty percent of the value listed in the Kelly Blue Book so you’ll want to make sure that you pay off this type of loan so that you don’t lose your car for eighty percent of the car’s value.

Personal loans for people with bad credit that are truly unsecured exist in the form of signature loans, but they are generally very selective as to who they will lend to. If your credit is perfectly horrible, then yo u might not qualify for this type of loan at all, but if you have a good income and a lot of time on the job and a stable address history you might be able to get this type of loan. This type of loan builds your credit, because they report your good payments to your credit file, so this is the type of loan to choose, because payday loans and title loans generally don’t report to your credit at all.

‘Unsecured’ and ‘personal’ aren’t usually best friends, in fact they’re more like oil and water. Lenders obviously don’t love to lend to people with bad credit and if you take away their ability to reposess collateral, they are left with little security. For that reason, banks don’t provide unsecured loans to people with bad credit.

To say this all more simply, signature loans and unsecured loans are extremely difficult to qualify for if you have a bad credit score.

So what do people do if they really need a loan and can’t qualify for a traditional bank loan? This article provides three options.

1. Payday Loans

Many people really don’t want to take out a payday loan, but they can be useful in an emergency. Let”s say that you get paid on Monday and you’re going to get kicked out of your apartment if you don’t pay the rent today. If your choices are either get kicked out or use a payday loan, I’d use a payday loan.

The problem with these loans is that the interest is absolutely ridiculous. You are going to end up paying more than 1000% annual interest and honestly, that’s a lot of interest. However, like I said, sometimes you don’t have any other choice.

2. Business Cash Advance Loans

If your business accept credit cards, you might be able to get a business cash advance loan. These loans advance you money on sales that you expect to be getting within the next few months. You generally have to have a proven track record of selling and the ability to accept credit cards. As long as that’s all in place, over 90% of applicants get approved for these loans.

These loans are somewhat like regular cash advance loans – they aren’t cheap. You can expect to pay a lot in fees and these loans should only be considered if you have exhausted every other option. If there’s any way that you can get a loan from a bank it will be a lot easier to pay off because the fees will be more reasonable.

3. Find a Cosigner.

No one ever wants to find a cosigner to help them get a loan, but this is sometimes the best possible option. This will save you TONS of money because the interest rates you’ll be paying will be much smaller than either of the other two options that I know of. Unsecured loans with bad credit from a bank are only possible with a cosigner. While many of you won’t want to use this option, it’s by far your best one.