By: Corey Landis

Bad credit personal loans can be pretty painful. In addition to high interest rates, you are also forced to contend with inflated late fees. You may not be aware, but many of these loans include prepayment penalties, which means that if you try to get ahead and pay off your loan ahead of schedule, the lender will exact payment of all interest lost in addition to the sum of the principal balance. And, there will most likely be a demand for collateral, an asset you own such as your car or house, since an unsecured loan puts the bank

in a very precarious position. Still, there are ways to borrow money even with bad credit.

As a rule, you should have a definitive purpose for any money borrowed. It s too easy to spend the entire loan amount on impulse purchases. If you don t really need the cash for a specific reason, you might hold off until you have rebuilt your credit and can get better interest rates and terms from a bank.

Consolidating your debt is an excellent reason to seek out a loan; however, it is best to then close the fore mentioned credit cards and debts, otherwise you risk burdening yourself with even more debt. Before you start applying for loans, find the best lender with the most favorable terms. You ll want to look at the fine print too. Inquire about any fees and charges to ensure you fully comprehend them.

Don t apply to every lender you can find. All those inquiries will be reported to the credit bureaus and show up on your credit report. Not only does that lower your credit score a few points the lenders don t look on it very favorably. They may think you re trying to get as much cash as possible and then default on the loan.

If you need just a few hundred dollars you may be tempted to get a pay day loan. Think twice because the application fees can be high, as much as 10 of the loan amount. The loan has to be repaid quickly, usually in 30 days or less. If you can t repay it you can roll the loan over for another 30 days but the application fee has to be paid again.

Loans against your car use the same principle of high application fees. You sign over the title of the car to the lender with the stipulation that when the loan is paid back you get the ownership of the car back. The amount you receive is far less than the blue book value of the car. If you don t make the payments you lose the car. What s worse is the lender then rents the car back to you at a highly inflated price. Don t think you can ignore making the payments and still drive your car. Technically that s auto theft and you can be arrested.

You can get a personal loan with bad credit but look at all your options and read the fine print.