How to Get a Loan with Bad Credit - The Bigger Picture You Need to Look at Before Pursuing This

If you live within Canada and you are asking how to get a loan with bad credit because you don't qualify for a normal loan right now, you might, in fact, have other options. Some of these options that you're probably not aware of have the potential to resolve your debt issues, restore your credit, and set your finances back on a firm footing.

The first thing you need to do right now is to stop and ask yourself a question: "Why?" Why do you have to have this loan? What's compelling you to find one? Take a moment to click on your motivation below, and discover whether other, better possibilities may be available to you.

  1. This is for an emergency. Your car broke down, you have a big dentist bill, your dog is sick, you need to travel to visit a sick relative, or something else along these lines.
  2. You are trying to rebuild your credit or improve your credit score.
  3. You would like to have just one loan with one payment. You’re trying to get a more affordable payment by paying off your debt over a longer period of time, or your existing interest rates are too high.

1. Need Money for an Emergency

If you really need some money right now to deal with an actual emergency because you haven't saved anything to handle emergencies, then you might need to continue on with your search and see if you can find a loan company that is able to help you. You should know, though, that if you have bad credit, you'll likely be looking at an interest rate of close to 47%. However, you might be able to qualify for something better if your credit doesn't look too bad. Learn more, find out how to keep from getting ripped off, and see some other ideas.

2. Trying to Rebuild or Improve Your Credit Rating or Score

You might be looking to apply for a loan because someone told you that's how you can improve your credit score. While this advice may help you over the course of many years, if you have bad credit, it's no longer about saving your credit. It's now about rebuilding your credit. To make this happen as quickly and effectively as possible, your best bet is to speak with a non-profit Credit Counsellor near you.

A Credit Counsellor will sit down with you (either in person or over the phone – it’s your choice), go over your complete financial picture, answer some of your credit related questions, and help you put together an action plan to re-establish your credit. You'll know which steps to take so that you can reach your financial goals. Meeting with a non-profit Credit Counsellor is usually free and always completely confidential.

You can also take steps to improve your credit by following the suggestions in our How to Fix Your Credit Guide.

3. Want a Monthly Payment You Can Afford

Before we continue, there are some important questions you need to ask yourself. In all honesty, is a loan really the most ideal solution to your financial situation? Is it truly what you need? Are you sure it will actually help? Is this part of your plan to truly deal with the situation, or are our merely prolonging the pain? Do you think it's possible that a loan will only serve as a short term fix for a longer-term problem that has been developing? Have you thought about the possibility that your cost of living could be increased by an online bad credit loan, that it may push you further behind with extreme interest payments you may hardly be able to afford? Have you considered that it could hurt you?

Don’t rush into anything that may end up hurting you and possibly causing more harm than good. Know your options. Get advice from someone who is knowledgeable about how to overcome bad credit – someone who doesn’t have an interest in selling you a loan.

What you need to do is address the underlying problem that’s causing financial issues. Find the cure. Don’t just prolong the pain.

The first step you take should be to sit down with a local, not for profit Credit Counsellor. They'll carefully examine your complete financial situation for you, help you make a spending plan (budget), and help you make sense of all your options so you can create a plan to get your finances back on track as quickly as possible. When dealing with circumstances like this, you can never say, "one size fits all." Every person's situation has it's own distinct aspects. That's one reason why it's so valuable to meet with a real expert to look over your situation to find out what possibilities may be available to you.

Another Option for People Looking for How to Get a Loan with Bad Credit That is Similar in Many Ways

Even though there are a fair number of ways to assist people looking for how to get a loan with bad credit, a nice option a lot of Canadians don't really know anything about is a Debt Management Program.

If you make the choice to go with a Debt Management Program, a credit counselling agency will then get a hold of your creditors and arrange things so that each one of your unsecured debts is added to the repayment plan (it isn't a personal consolidation loan, but it pretty much gives you the same result in the end). Every one of these payments is then consolidated into just one monthly payment that you are able to afford. Interest rates on these debts are then either drastically reduced or eliminated entirely. If you also happen to have debts that are secured by something, your Credit Counsellor will work these secured payments for these debts into the program so that you are able to afford to pay them each month.

The average program lasts 2.5 years (the maximum length is 5 years), and the credit counselling agency can work with you to rebuild your credit once you've finished the program. Some credit counselling organizations even have a credit rebuilding program available in the back end of the repayment program that you can choose to take advantage of if you wish to.

What to Do if You’re Really Struggling with Debt

If you're looking for how to get a loan with bad credit and you’re having a hard time with your personal debt and could use some help, don’t making things more painful by prolonging the pain with a quick bad credit loan. Take the time today to speak with a good non-profit credit counselling agency, find out what you don't know, and use their help to put together a plan to get your finances back on the right track. Another great thing about non-profits like this is that they typically help people for no charge, and their assistance is completely private and non-judgmental. You really have nothing to lose by speaking to a Credit Counsellor. Their job is simply to help and assist you. Find one near you.