People who have a poor credit history will find it difficult to get another loan, fortunately there is another special type of loan intended for them, and this is called bad credit personal loan. There are several reasons a person can have a bad credit score rating, such as failure to pay his or her credit cards, failure to honor previous credit agreement, or have a court judgment against the person's name. Another important factor in getting a poor credit rating is if the financing institution will find that you do not have enough proof that you can manage well your borrowings. Because of these reasons, traditional banks and mainstream lenders would refuse to lend people with credit score ratings that failed. 

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As mentioned, bad credit loan is the solution for those people whose loan applications were denied by lenders because of various poor credit histories. The good thing about bad credit loan is that you can still get the much-needed money that is denied by the traditional lending institutions. You can then use the money to buy something, for emergency, to pay other debts, or even improve your credit rating. Through this loan also you can show to other agencies that you can already manage your credit in a responsible manner. Bad credit loan is undoubtedly a new source of money for people with poor credit rating. However, this type of loan is only available at very high interest rates compared to the regular loans offered by the traditional financing institutions. This is understandably so because of the high risk also that they put on individuals with poor credit rating.

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Bad credit personal loans in Toronto have two types, and these are secured or unsecured loans. Unsecured loans mean that the borrower is not required to offer a security or asset or collateral by the lender. And so in this case, if you fail to keep up with our payments, the lender cannot claim your property. In secured loan, the lender will require a collateral before offering you the loan, thus the interest rate in this loan is lower, while the unsecured loan will consequently have a higher interest and restrictive conditions.

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Because of the no-collateral requirement, the unsecured loans are still the most availed because the borrower does not have to risk his or her home or other assets just to obtain the loan, even if the interest rate is very high. On the other hand in secured loan, since the lenders can take possession of your collateral if you default payments, these lenders of this type of loan also give a very low interest rate. Further, for you to get an unsecured loan, the lender will require you to have a co-signer who has a good credit rating. Know also that the interest rates of bad credit loan is computed based on the amount being borrowing, meaning the rates will not be the same depending on the money you are borrowing. Go to http://www.huffingtonpost.com/nerdwallet/no-collateral-no-problem_b_9662314.html to read more.