| Bad credit loans seem to be a hot topic these days. In | | | | itself! |
| fact, if you need a bad credit loan, you're likely to find | | | | So why did he charge you the higher rate? Because |
| an overabundance of information. | | | | he knows he can get it! After all, he's got you "over a |
| See if this sounds familiar. You need a loan. Maybe | | | | barrel." He knows (and you know) that you need a |
| you want to buy a car, enroll in college, or take out a | | | | loan, but because of your bad credit no one's going to |
| home improvement loan. Or perhaps you're a first time | | | | give you one at a low interest rate. |
| home buyer and you're looking for a mortgage. The | | | | Do you see now why people are so eager to lend |
| problem is, you've got a bad credit history, and you're | | | | you money in spite of your bad credit? In fact, credit |
| afraid you won't be able to find a lender. | | | | reporting companies make a fortune selling lenders the |
| But then you do a little research on bad credit loans | | | | names of people who have bad credit. Those lenders |
| and find that, lo and behold, there ARE loans for | | | | know they can charge them high rates, and that if |
| people with bad credit available! In fact, EVERYONE | | | | they need credit, they have no choice but to pay them. |
| wants to give you a loan. Loans for cars, mortgage | | | | So what's the solution? You may be thinking "What |
| loans, student loans, personal loans, loans for just about | | | | choice do I have anyway? My credit is bad, I need a |
| anything you want. Not only loans, but credit cards too. | | | | loan to get a house (or car, college education, or |
| Why, who would have ever thought is would be so | | | | whatever) and there's just nothing I can do about it |
| easy to get a loan when your credit history is so | | | | except find a lender willing to give me a loan at |
| dismal? | | | | whatever interest rate I can get!" |
| So, that's great news, right? RIGHT? | | | | But consider for a moment whether you might be |
| Let's just stop for a moment. Ask yourself "Why is | | | | looking at the situation from a completely wrong angle. |
| everyone so eager to extend credit to me when my | | | | Rather than resign yourself to the situation, you should |
| credit history is so bad?" | | | | be thinking about repairing your credit. |
| The question can be answered in two words -- HIGH | | | | Now if you just found the house of your dreams, you |
| RATES. Sure, you can get a bad credit loan easily | | | | may have no choice but to act now before someone |
| enough. But you'll "pay through the nose" when it | | | | else buys it. But if you can wait a couple of months, it's |
| comes to the interest rate. | | | | highly likely you can make some major improvement in |
| So "What's the 'big deal' about paying a little higher | | | | your credit score and THEN look for a loan. |
| rate?" you ask. | | | | Maybe this isn't what you wanted to hear. After all, |
| Let's look at a few figures. | | | | you're looking for a loan, NOT credit repair advice. But |
| Suppose you want to buy a car. After looking long and | | | | wouldn't it be worth it to postpone getting that house |
| hard, you find the "perfect" car for $20,000. So you | | | | or that car if it would save you thousands, tens of |
| apply for a car loan and get a loan with no trouble, but | | | | thousands, or maybe even $150,000.00 or more over |
| because of your poor credit, you have to pay 20% | | | | the long haul? |
| interest. On a 60 month loan, your monthly payments | | | | If you're thinking your bad credit history is something |
| will be $529.88. | | | | you're just stuck with, or that it will take years to |
| Now if your credit were very good, you might have | | | | improve, you're mistaken. It's often possible to make |
| gotten the same 60 month loan at an interest rate as | | | | major improvements in your credit rating in just a few |
| low as 10%, with monthly payments of $424.94. | | | | months, and in some cases in as little as 30 days! |
| The bottom line is, over the life of the loan you'll have | | | | It's not that difficult either. You basically have 2 options. |
| paid an additional $6,296.40 in interest that you would | | | | You can hire a "Credit Repair Agency" or you can |
| NOT have paid if you had you gotten the loan at 10% | | | | take the "do it yourself" approach. |
| interest. Your bad credit loan will have cost you $6,296 | | | | If you decide to hire an agency, you can easily find |
| more FOR THE SAME CAR! | | | | one in your phone book or online. Just look for "credit |
| But if you think that's bad, take a look at a home | | | | repair." However, it won't be cheap. Agencies usually |
| mortgage loan! | | | | charge from $2,500 to $5,000 or more to repair your |
| Suppose you want to buy a $100,000 home and | | | | credit. But that's still a bargain compared to how much |
| you're just thrilled to find a lender willing to give you a | | | | you'll be saving in the long run. |
| 30 year loan in spite of your bad credit. He'll charge | | | | But if you think only a professional agency can fix your |
| you 12% interest, and your monthly payment will be | | | | credit, think again! In spite of their high fees, they won't |
| $1,028.61. | | | | do anything for you that you can't easily do for |
| If your credit had not been so bad, you could have | | | | yourself. If you can write a few letters, address, stamp, |
| gotten the loan for a rate closer to 9%. If your credit | | | | and mail them you can repair your own credit. |
| had been very good, you might have been charged | | | | If you choose the "do it yourself" route |
| only 6% interest and your monthly payment would | | | | (recommended) you can learn how by doing some |
| have been $599.55. | | | | online research. Unfortunately, along with all the good |
| The bottom line? That bad credit loan will have cost | | | | information you'll find some misinformation as well. A |
| you (over the 30 year term) a staggering $154,461.60 | | | | better option is to find an authoritative book on credit |
| MORE than you would have paid had you gotten a | | | | repair and follow the advice therein. |
| loan at the 6% rate. | | | | In conclusion, you should seriously consider postponing |
| No, this is NOT a typo. Your lender will pocket | | | | your search for a bad credit loan. First spend a couple |
| $154,461.60 in additional interest payments because | | | | of months improving your credit rating. Then you can |
| you were charged a higher rate for a bad credit loan. | | | | abandon the search altogether, and begin looking for a |
| That's over 1 ½ times the cost of the house | | | | GOOD credit loan! |