If an individual has a credit score between 300 and 649, securing a loan can be difficult. This is why bad credit loans are beneficial. They are specially designed for those with low credit scores. One can use these loans for a certain period to build their credit, and thereafter become eligible for other loans of their choice. Continue reading to know more about the various types of loans for those with low credit scores.

Payday loans
Though expensive, payday loans offer a short-term solution to borrowers who do not have a bank account and do not qualify for any other type of loans. Typically, lenders offering payday loans do not check a person’s credit score, and one can get loans up to $500. Because brick-and-mortar lenders provide checks, one can probably get loans within a few hours. However, payday loans must be one’s last resort because the interest rates and overall fees can be steep, usually more than 300 percent of the loan amount. Additionally, one will have to repay the borrowed amount by the next payday or incur a substantial penalty if one chooses to extend the debt term.

Unsecured personal loans
This refers to funding that’s received in a lump sum amount. One has to make fixed monthly payments over a set duration. Since these loans do not need collateral, one does not have to put their personal property at risk. Unsecured personal loans are relatively more challenging to acquire, especially if one has a poor credit history. But there are many providers like LendingTree, OneMain Financial, AmOne, among others, that provide bad credit loans. It is important to remember that unsecured loans usually have higher interest rates, especially if one has a low credit score.

Cash advances
A cash advance allows a person to withdraw money from their credit card’s available balance, which is predetermined by the credit card issuer. The amount borrowed is added to the outstanding balance on the credit card. This will attract a higher interest rate than the typical credit card purchases. But one can curtail the total cost by using cash advances strictly for emergencies. While this is a quick solution during financial hardships, cash advances can be expensive and can extend the period of one’s credit card debt.

Secured personal loans
For such loans, one has to provide an asset as collateral, such as a savings account, a house, or a car. If one cannot repay the loan, the lender will keep the property for debt repayment. As these loans are backed by collateral, they attract lower interest rates. However, they are relatively less risky for the lenders.

Car title loans
This type of bad credit loans allow one to borrow around 25 to 50 percent of their vehicle’s value. However, there is a condition to consider – one must fully own their car and transfer the title as collateral until the entire debt is repaid. These loans usually have a short repayment period of around 15 to 30 days, and one can get a loan for as low as $100. One of the advantages of these loans is that they are quick. However, this ease of access comes at a high price. If one is unable to reimburse the loan within the brief repayment window, the lender will repossess their vehicle.