Bad credit loans can either be put to constructive use or could be destructive based on how you use. The following is a list of some of the good uses of credit loans:
1. Cash loans: They are easier to get, and the transaction can be between two known parties. You can borrow money from either a friend or a relative. Usually, on such loans, the interest rate is very low or absent as compared to loans obtained from banks or financial institutions. The loan can be repaid after the deadline as well. One can use collateral as leverage for the loan. However, make sure that you always sign a binding contract with the other party.
2. Installment loan: As the name suggests, the loan can be paid back in installments over a period. Hence there is no urgency to explain the loan. These loans are used for the purchase of vehicles, furniture, etc.
3. Wedding loans: Weddings can be an expensive affair, and it may be difficult to produce cash up front readily. Even with a bad credit score, you can repay this loan up to a period of 8-10 years, putting less pressure on you.
4. Government loans: They are used for purposes like the expansion of businesses, setting up businesses, student loans to name a few.
Other uses include loans for consolidation of debt, boat loans, and military loans.
Poor uses of bad credit loans:
1. Private and not government student loans: They have variable interest rates which are quite high in most cases, such loans cannot be deferred, and they cannot be forgiven, unlike federal loans. They swindle students and place a heavy burden on them to repay their loans. This is a huge problem faced by several students in the United States, who end up with a poor credit score as a result of this.
2. Small business loans: Loans from private firms come with high-interest rates and exorbitant monetary terms. Always choose federal aid over private aid if possible.