Getting installment loans for people with bad credit can be especially challenging, but is not impossible. The presence of a good job and stable residence is more important when credit issues are part of any loan application, and in some cases collateral such as stock accounts may be required to secure the loan.
Unsecured Loans
Some lenders, including local banks, credit unions and finance companies such as American General (see Resources section) are willing to extend personal loans to credit-challenged borrowers. Income verification is typically required, and possibly an explanation of how the bad credit situation occurred in the first place.
Secured Loans
Most local banks and credit unions will extend installment loans to people with bad credit if they can offer collateral that the lender can take in the event the borrower defaults on a loan. Examples of effective collateral for such loans include equity in a house, a paid off vehicle, quality jewelry, stocks, savings accounts, retirement accounts and certificates of deposit.
Auto Loans
Major auto dealers and independent used car dealers usually will issue installment loans to someone with bad credit who wants to buy a car. However, a cash down payment of at least $1,000 and income verification is usually required for these loans.
Mortgages
Mortgages are special installment loans used to enable a borrower to purchase a home. This kind of borrowing has the strictest of income qualification for those with bad credit, often requires bank statements and tax returns, and anywhere from five to 20 percent down payment to gain the mortgage installment loan.
Computer Loans
There are several companies, especially on the Internet that will grant installment loans to bad credit consumers so they can obtain a computer (see Resources below). It is rare for a computer to be seized in the event of loan default, but income verification and usually an active checking account is required to get a computer and pay it off in installments.
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