Bad credit is a problem that plagues about 30 million Americans. For many of us, bad credit financing is our best chance for getting a mortgage, a debt consolidation loan or an auto loan. We can still get competitive interest rates even if we have a FICO score that puts us in the bad credit financing range.
Bad credit financing - home equity loans vs. lines of credit
Bad credit financing in the form of home equity loans come in two types: fixed-amount loans, which work like second mortgages, and lines of credit, which work like credit cards. Fixed-amount loans are less flexible than lines of credit. You get all your money up front and can’t borrow any more without getting another loan. But this is also a plus if you need all the money at once for big-ticket items like home improvements, buying a new vehicle or meeting a medical emergency.
Bad credit financing on home equity loans usually have slightly higher interest rates, but since the payments are fixed over the life of the loan and won’t vary as they will with a line of credit, you’ll probably wind up paying less interest over the life of the loan. As with a second mortgage, the interest you pay on a home equity loan may be tax deductible to a maximum of $100,000 for taxpayers filing jointly.
A few cautions for this type of bad credit financing:
According to the Consumer Banker Association, here are the top ten uses for home equity loans:
9. Medical expenses
8. Business expenses
7. Household expenditures
5. Major purchase
4. Education expenses
3. Automobile purchase
2. Home improvement
1. Debt consolidation
Poor credit financing - debt consolidation loan
Debt consolidation is a smart form of financing because of the money it can save you. For example, say you owe $15,000 on a credit card that charges 17% interest. If you get a debt consolidation loan at 9% interest and pay it off in five years, you’ll save you over $30,000!
Debt consolidation is a popular reason that people draw on the equity in their homes. It’s a great way to get rid of high-interest credit card bills and car loans, or to meet large expenses such as college tuition or http://www.copernicus-psd.com/understanding-clay-soil-and-how-to-improve-it/.
Bad credit financing - links to preferred lenders
Depending on your current situation, one of these bad credit financing options might be just what you need to get back on your feet.
Bad Credit Financing for Home Equity Loans - Use the equity you’ve built up over the years to make home improvements, pay off your bills or meet unexpected expenses.
Poor Credit Mortgage Refinancing – Get a lower-interest mortgage to pay off an existing high-interest mortgage and save thousands!
Poor Credit Second Mortgages – If you don't want to refinance your first mortgage but would like to cash out your equity, this bad credit financing option could be just the ticket.
Poor Credit Debt Consolidation Loans – Pay off your bills with a debt consolidation loan and leave yourself with a single monthly payment.
Bad Credit Financing for Auto Loans – Even people with poor credit need dependable transportation. Finance the car or truck you want at competitive rates.
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