Poor Credit Loans. Page 2

Shorter repayment term

Another disadvantage of a poor credit loan is that the lender may choose to grant the loan for a shorter term that he would otherwise. For the borrower who had a valid reason for losing his credit standing, this may create more of the same kinds of problems. At the same time, the lender wants to protect himself, and by offering a shorter repayment term, he is attempting to recoup as much of the money he loaned as possible before the loan goes bad. Unfortunately, for those who really need the loan, either they have a ( mortgages ) disadvantage because they take the loan as is and struggle to make the payments or they can't have the loan. Sometimes it means letting another bill go or the borrower getting a second job to make the payments.

Loan must be secured by property

For those who are in need of a poor credit loan, quite often no matter how small the amount, the lender requires some kind of property as collateral. For smaller loans, a car title may be sufficient, but for larger loans, collateral in the form of a lien against the borrower's home may be required. Seldom does a lender grant a poor credit loan on the borrower's signature alone because the credit history does not justify it. With poor credit, the lender has nothing on (secured loans) which to base his decision, so he insists on the loan being 100% secured, meaning that the collateral pledged must be equal in value to the amount of the loan.