Payday Lenders Are Not the Only Option for Bad Credit Unsecured Personal Loans

Credit card issuers, banks and credit unions have toughened their requirements more than at any time in the recent past due to these recessionary times. Applications for unsecured credit cards and bad credit unsecured personal loans are being rejected in high numbers. Unfortunately, those with poor credit either quit any efforts toward borrowing bad credit unsecured personal loans altogether – they certainly reject the traditional brick and mortar lenders – or they end up going to pawnshops or small check cashing companies that lend small amounts of cash at rates that might make a loan shark be embarrassed. However, there are alternatives for bad credit borrowers seeking to secure the financing they need.Understand your relationship with traditional lendersNegative. That is the feeling most Americans have regarding traditional brick and mortar lenders such as banks and credit union. The shenanigans of Wall Street bankers over the past few years certainly reinforces those feelings. Still, most people still secure their financing at these places, often going to banks where they hold accounts. Still, they are getting rejected as well, even with the slightest credit blemish, as banks reduce their overall market risk.Credit card issuers are following the same path. Their requirements for unsecured credit cards are more stringent than ever. Unfortunately, that means if you have been rejected once or twice, the trend will continue. Some rejections on new applications are made just because past rejections were issued. Repeated applications just hurt credit reports more, the more applications the more lenders see the prospective borrower as desperate.Payday lenders, pawn brokers probably hurt more than helpOnce rejected by the traditional lenders, banks and credit unions, bad credit borrowers may decide to try using a pawnshop or a cash advance or payday lender. Actually, getting funds from these establishments is rather facile. At a pawnshop, you just hand over a valuable personal possession, the dealer appraises it at far less than its value, then gives you a very short time to pay back the loan and retrieve the property. Defaults on these loans are common. The prized possession is in the window for sale in no time.Cash advance or payday lenders, while they do not ask for collateral, operate in a pretty similar, ruthless manner. Face it, they are legal loan sharks. Payday lenders charge interest rates ten times more expensive than the traditional lenders. They proffer that the high rates are due to the high risk of lending to those with bad credit and no collateral. The rates probably do not really reflect the risk. Those who use payday lenders and pawnshops are probably hurt more than they are helped.The best bad credit personal loans can be found onlineSecuring a bad credit personal loan is difficult – traditional lenders just will not lend and payday and pawnshop lenders overcharge. But even those with serious credit issues have had success with online lenders. Proof of identity and residence, proof of employment and sufficient income, are usually enough to land a substantial loan. The amounts offered may be a little less than from traditional lenders, but the rates are far better and repayment terms more comfortable than pawnshops and payday lenders.A great thing about online lenders is that they have stepped in to fill the breach left by banks and pawnbrokers. Competition is fierce and you will be able to pick and choose among lenders to find the best rates and the most comfortable repayment terms. You will be the shopper, you will be in control. Just be careful, as with any online transaction, you have to be proactive to protect your identity and your financial information.