see if this doesn't sound familiar. You need a loan. It could be you need a car, or to enroll in college, or get a home improvement loan. Or perhaps you're a first time home buyer and you're looking for a mortgage.



But there's a problem: you've got a bad credit history, and you're not sure you can find a lender. But then you do a little research on bad credit loans and find that, lo and behold, your bad credit won't stop you from getting a loan at all! In fact, EVERYONE wants to give you a loan. Loans for a house, a car, student loans, personal loans -- just about anything. Not only loans, but credit cards too. Did you ever imagine getting a loan would be so easy with a bad credit rating?

So that's terrific news, right

But let's consider. Ask yourself "Why are all these people want to loan me money even though my credit is so bad?"

Simple -- HIGH RATES. Sure, you can get a bad credit loan easily enough. But the high interest will eat you a live.

So "What's the 'big deal' about paying a little higher rate?" you ask.

Let's check out some numbers.

Suppose you'd need a car loan. After looking long and hard, you find the "perfect" car for $20,000. So you put in a loan application and get a loan with no trouble, but because of your poor credit, you have to pay 20% interest. On a 60 month loan, your monthly payments will be $529.88.

Had your credit been top-notch, you might have gotten the same 60 month loan at an interest rate as low as 10%, with monthly payments of $424.94.

The result is over the life of the loan you will have paid an additional $6,296.40 you would never have had to pay if you had you gotten the loan at 10% interest. Your bad credit loan will have cost you $6,296 more FOR THE SAME CAR!

Think that's bad? Consider a home mortgage loan.

Suppose you want to buy a $100,000 home and you're able to find a lender willing to give you a 30 year loan in spite of your bad credit. You're interest rate is 12%, and your monthly payment will be $1,028.61.

Had you credit been better, you might have gotten a rate more like 9%. But if you had very good credit, you might have been charged only 6% interest and your monthly payment would have been $599.55.

The bottom line? That bad credit loan will have cost you (over the 30 year term) a staggering $154,461.60 MORE than you would have paid had you gotten a loan at the 6% rate.

This is NOT a typo. Your lender will pocket $154,461.60 more because of the higher rate for a bad credit loan. That's more than 1 ? times what the house cost!

So why did he charge you the higher rate? Because he knows he can get it! He knows (and you know) that you need a loan, but because of your bad credit no one's going to give you one at a low interest rate.

Do you see now why people are so eager to lend you money in spite of your bad credit? In fact, credit reporting companies make a fortune selling lenders the names of people who have bad credit. Those lenders are happy to charge the high rates knowing the borrower has no choice but to pay them.

So what can you do? You may be thinking "What choice do I have anyway? My credit is bad, I need a loan to get a house (or car, college education, or whatever) and there's just nothing I can do about it except find a lender willing to give me a loan at whatever interest rate I can get!"

But consider whether you're looking at the situation from a completely wrong angle. Rather than resign yourself to the situation, give some thought to improving your credit.

Now if you just found the house of your dreams, you may have no choice but to act now before someone else buys it. But if you can wait a couple of months, it's highly likely you can make some major improvement in your credit score and THEN look for a loan.

Maybe this isn't what you wanted to hear. After all, you're looking for a loan, NOT credit repair advice. But wouldn't postponing that house or car be worth it if it would save you thousands, tens of thousands, or maybe even $150,000.00 or more over the long haul?

If you're thinking your bad credit history is something you can't change or that it will take too long to fix, think again. It's often possible to make substantial improvements in just a few months, and in some cases in as little as 30 days!

It's not that difficult either. You can do one of 2 things. You can hire a professional to do it for you, or you can do it yourself.

If you would rather hire a professional, you can easily find one in your phone book or online. Just look for "credit repair." However, it will cost you. Agencies charge $2,500 to $5,000 or more to repair your credit. But compared to the cost of bad credit that's still a bargain.

But if you think only a professional agency can fix your credit, think again! In spite of their high fees, they won't do anything for you that you can't do on your own. If you're able to write and mail a few letters then there's no reason you can't repair your credit yourself.

If you choose the "do it yourself" route (recommended) some online research will teach you how. Unfortunately, along with all the good information there's also some not-so-good. A better option is to find an authoritative book on credit repair and follow the advice therein.

In conclusion, think about putting off your search for a bad credit loan. First spend a couple of months improving your credit rating. Then you can abandon the search altogether, and begin looking for a GOOD credit loan!