What are the types of loans to stay away from?

Getting loan has become a big process in today’s world. For the people with high credit score, there are a lot of loan options to choose from. For those with low score, there are a few loan options and the customer has to pick the right lender amidst the bad credits which have to be avoided at any cost. Here are a few credits which people should stay away from.

Automobile loan even with bad credit score

If you have a very low credit score and a company is still ready to lend you money for your automobile, then make sure to check the interest rate. If the interest rate is in double digit and the time given for paying is more than four years, then it is better not be take the deal. You should not refinance the loan as the value of the automobile would depreciate faster than the loan is paid off.

Payday loans

Some states have considered payday loans as illegal. Payday loans are the small loans that the lender would provide if the borrower shows a proof of his income. The amount that can be borrowed should be less than thousand dollars. The problem is the interest rate that would eat up most of the income and the borrower has to get another payday loan and this would go on, unending.

Auto title loan

The creditor is ready to pay you thousands of dollars for an automobile. If you are not able to pay the amount, the creditor would get your automobile.

Mobile home loan

If you are planning to buy a mobile home, there are mobile home loans with interest rate of 19% for 20 years. This makes it more expensive than the 30 years loan. The value of the mobile house also depreciates faster and thus, it is not possible to find another company which would refinance the loan.

Quick personal loans

If you have a bad credit score and the lender is ready to pay you money quickly, it is better to read the documents clearly. Check what you are keeping as lien and the interest rate. Check for other hidden charges and also the other fees.

If you are with a very low credit score, the lenders might not be as good as the banks. You need to read the documents, be alert and compare all the options, before choosing these loans.

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