Social Lending: How To Find The Best Value Personal Loan With Bad Credit

by

Brianna Harmer

A Bad Credit Personal loan is a loan available to people with a poor credit history. Traditional lenders won\’t approve loans to people with poor credit scores or with mortgages in default or arrears. Did you know you can borrow up to $5,000 without increasing your mortgage or refinancing your home? As long as you have been employed for over three months and aren\’t on probation, you can borrow money secured against your property, even if you have bad credit. This article will briefly look at the ways you can find the best value person loan.

Get A Free Credit Report

You are entitled to get a free credit report; do this and you\’ll see what lenders see. The worse your score is, the more you\’ll end up paying in interest on your personal loan. You may be able to fix your own credit score on your own. You simply need to write to any of the three credit rating agencies if you feel that there is some inaccurate or outdated information that is dragging your score down. You can get a free copy of your credit report from any one of these three credit reporting agencies: CheckYourCredit.com.au (Dun and Bradstreet) – 1300 734 806, Tasmanian Collection Service – 03 6213 5555 and MyCreditFile.com.au (Veda) – 1300 762 207.

There are many law firms online that will offer a free evaluation and then a paid service where they\’ll fix your bad credit. You can write letters yourself but you must always act ethically and never contest information that you know to be accurate and true.

Where Do I Get A Loan?

As banks pay such low interest to savers, many people are looking to social lending as way to get higher returns on their cash. Social lending (known as peer-to-peer or P2P lending) is an extremely popular way to borrow cash for people with a poor credit history. Australia has many social lending sites that are free to join. You may wonder why the interest rates vary so wildly between each loan but it is worth bearing in mind that most often rates can only be given after a full assessment has been made.

How Do I Find The Best Rate?

When assessing the effective cost of personal loans, the social lending site should be up-front and transparent about what\’s called the \’Comparison Rate\’ as required under law by the Consumer Credit Code. You should closely check the maximum interest rate, the settlement fees and any other fees that you may be charged. Sometimes this is only possible after you complete an application and submit your request. Lenders will want to carefully check before offering you a rate.

It\’s also important to consider all the fees that aren\’t included up front such as government and statutory fees and fees and charges that are event-based and may or may not apply throughout the life of your loan. Examples of these would include late-payment fees; redraw fees or early repayment fees. Lenders may offer a promissory interest-free loan rate but then there might be a penalty rate if you fail to keep up with your repayments.

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