Collateral Loans for People With Bad Credit

One of the best ways to help ensure you’ll get a loan you need with bad credit is to have collateral. A reputable bank may not be willing to do business with you if your credit is poor and you simply walk in and ask for a loan, but collateral loans with bad credit are a different story. And the better your collateral is, the more likely you may be to secure the money you need.

What Can You Use For Collateral?

Basically anything of value can be used to help you borrow money. You can put up electronics like television sets, blu-ray players, and expensive game systems as well as car titles and even pricey jewelry. The sky is the limit. As long as you can prove you actually have the items and are OK with the fact that the bank may repossess the items in the event you don’t make your payments, you can probably use them.

Disadvantages of Using Collateral

Although having collateral helps, it isn’t necessarily a guarantee you’ll get your money. Also, if you’re looking to get, for example, a $4000 loan with bad credit, you probably won’t be able to borrow that much money if all you can offer up in collateral is $2000. Another thing to think about is the fact that the bank may not consider your items to be as of much value as you do. If you put a television set up for collateral that cost you $1000, chances are good that the bank won’t value it at that much. In fact, don’t be surprised if the bank declares that it’s only worth $500. The same goes for cars and other items you might be thinking of using as collateral.

Using Property As Collateral

Banks may offer collateral loans for people with bad credit for higher dollar amounts if things like houses and property are used. However, the Federal Trade Commission urges borrowers to use caution before doing this because homes and land are things most people can’t really afford to lose. You could get yourself into major trouble by using your home or land as collateral for a short term business loans only to end up losing those things if and when your business fails. When borrowing money for a risky investment such as a start-up business, be sure not to put anything up for collateral that you can’t manage without.