If you have a poor credit history, then you might find it difficult to get the loan you require. Lenders will have more rules and specifications that you must match before they will give you a loan. After all, lending money to people with bad credit is a risk for them when compared to people with a good credit history. So let’s take a look at some terminology for poor credit loans to make sure you understand what you might be agreeing to:

Annual Percentage Interest Rate (APR)

This is commonly referred to as the APR of a loan. What it means is the total amount of percentage you pay for your loan each year. What you will find with a poor credit loan is this amount will be a lot higher than a normal loan which is commonly 8% to 30%. Poor credit loans aren’t designed to last for years like regular loans. The lenders want their money back fast and will charge you a high percentage of interest for the privilege. So be sure to check this out very carefully before signing on the dotted line.

Full Disclosure

It is crucial that the lender explains all the various terms and conditions of a loan. This is known as the full disclosure. If they won’t go through all the details with you then you should be very cautious as there might be hidden small print that could cost you a lot of money.

Collateral

Collateral basically means an object that you offer the lenders to secure a loan. This is commonly your home or your car. What happens if you fall behind on payments is that they can take possession of your collateral to get their money back. If this means you get kicked out of your home then so be it. Lenders are only interested in their money. So be very, very careful that you can afford to pay back the amount you decide to lend. Otherwise it could turn into a disaster.

These are just some of the most commonly used terms you will find when looking to apply for a poor credit loan. Be sure to do your research so you know what you are signing for and that the lender has a good reputation. Some are more caring than others, so take your time and choose the best one.