Having a bad credit can make anyone frustrated. Privileges that go with having a good credit are suspended until you re-establish a good credit. Meanwhile, you suffer from rejections and denials especially for financial transactions that would require a good credit history.
Ironically, it is during these times when you begin receiving offers of loans from lenders promising easy payment terms and low interest rates even with your bad credit. You might be interested enough to ask the terms and condition of such a nice offer. Do not be surprised if it requires you to use your home as security in case you default due to non-payment of monthly obligations. These loans are called home equity loans.
Before you start counting all the bills and other debt that can be settled with the proceeds from the home equity loan, here are some information that can help you.
- These loans usually have variable interest rates based on prime rates. This means you have no defense whatsoever if interest rates double in a period of six months.
- These variable rates have no cap or limit. Lenders might entice you with low introductory rates and then increase the interest at a rate you can no longer afford.
- You will be offered with an option to pay the interest only and then demand a balloon payment by a certain date. Non-payment automatically loses you your home.
Although some lenders of home equity loans are legitimate, you should still consider the very high interest rates that will be imposed because of your bad credit. If you can manage with your current finances, it will be better to grit your teeth and wait until you have re-established your credit. Bad credit cards such as unsecured credit cards can help you make this possible. Although these cards will not require you to place any deposit, you will have a higher interest rate than regular credit cards.
This entry was posted on Monday, February 26th, 2007 at 1:32 am and is filed under General, "bad credit" loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
It’s a sad truth that having bad credit, you have to face immense payments such as fees for this and that and high interest rates. It is the price for acquiring good credit rating and advantages it gives.
You can’t avoid it all if you want to use loans and be ready to change your work, as everywhere you look, your credit file is required.
So, to begin building your score or rebuilding your damaged credit, you have several options: co-signer cards, secured credit cards (you guarantee debt payment installing the collateral equal to credit) and unsecured credit cards with numerous fee and rates. In any case, you will have to pay much or have much responsibility, but it’s an enormous price for future freedom and choice…