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Articles » Low Credit Score Loans | | Things to Watch Out For When You Have a Low Credit Score and Shopping For Loan |
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When you get to the point in your credit life where you need to apply for a low credit score loan , you are put into a vulnerable position that many unscrupulous lending agencies will take advantage of if they can. There is no reason to fall prey to these illicit and sometimes illegal tactics. Here are a few things to watch out for when you shop around for a loan if you have a low credit score:
First and foremost, don’t do business with any agency that asks you for a “processing” fee up front without giving you a clear statement of terms and conditions. Many of these sites are just portals to other, legitimate sites which are the actual lenders. Research more thoroughly and you will find direct links to the banks, mortgage lenders, or finance companies that offer loans.
On a similar note, be careful where you enter your personal information. Be cautious about sites that offer one application form for multiple loan offers. This may sound attractive because it can save you some work, but you will have to fill out an application with the individual lender after you are provided the referral. The original information that you submit just goes to build the database of the portal site. It can be sold or used by them for marketing purposes.
Avoid “hard closes” and “limited time offers”. These are put out by lenders that are desperate for your business and may not be operating within the full limits of the law. Many fly-by-night operations want you to decide quickly so they can make their money and get out. These are usually brokers that take a fee for getting a loan approved through a bank or credit union. If you dig a little deeper, you can go directly to the lender yourself and save yourself the fee.
Introductory low APR’s followed by an adjustable rate after a certain amount of time has elapsed is one of the worst deals you can get into when taking out a low credit score loan. These are the types of offers that are currently causing many home owners to go into foreclosure. Adjustable rates put you at the mercy of your creditors and make it very hard to budget. Take a high interest rate that is set before you get locked into a long term adjustable rate.
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