In order to understand the reason why there is this seemingly paradoxical difference you need to think about the loans in terms of profit and risk for the banks.

Profit:

First, a bank is in business to make a profit for it’s owners and shareholders. Simply put, making a small 1000 loan just doesn’t make the bank much money at all, especially when you consider the costs for loan maintenance, initiation, and customer service going forward on the loan. In essence, to cover those expenses a bank would have to charge quite a lot in fees and interest rates to make the loan profitable. However, with 50000 loans there is enough in principle for the bank to cover the maintenance, initiation, and servicing expenses and still make a profit without having to charge tons of fees and high interest rates.

Risks:

While this may sound somewhat counter-intuitive, a loan for 50000 dollars can actually end up being less of a risk to a bank. First of all, these types of loans are generally for business uses, or for purchasing other assets that have value in case of default on the loan. However, with 1000 loans, they are usually for paying bills or for small purchases like a couch or computer that are very hard to extract value from after a default. In addition, many times people who do need to borrow smaller amounts of money are those who don’t have many assets in the first place, making them higher risks again in case of default. As such, the bigger loan can end up being the more safe loan for the bank, and thus will carry a lower cost of interest and higher likelihood of being made.

There are some financial institutions that may average you scores to decide what the average score is. This average can end up being higher than 500. You can also use any property you might own as collateral in obtaining below 500 credit score loans. If all your outstanding debt is too much to average above 500 and you don’t own any property you might be able to free up some of your existing cash with debt consolidation. This consolidates all the payments you currently make into one or two lower payments. By paying a little less every month you have more spendable cash to use on other items.

You can also try to get a 1000 dollar loan with bad credit by using the title to your car to get a fast cash money loan. These quick cash loans can be obtained without having any credit check done. They are good for people that don’t have any credit history or have a very poor credit history. Even if you don’t own a home of your own, you might own a car or even a boat that can be used to obtain a fast cash loan. Ultimately, the best way to ensure receiving loans in the future is to pay off the debts you currently have to improve your credit rating.

Most people are left with the impression that there is no way you will ever qualify for a loan if you have bad credit. That was once a true statement, but nowadays there are lenders that specialize in loans for people with bad credit.

This is good news since more and more people are finding themselves in a situation where they are trying to improve their financial situation by getting a consolidation loan.

A consolidation loan simply means that you want to take all your monthly credit debt and lump it into one payment. Generally, by doing this, you will not only lower your payments but you will also get a better interest rate. Now, like I said before, you may in the beginning not get the interest rate you were hoping for, but don’t be discouraged. After just a few short months, if you have made your payments on time and for, at least, the minimum payment, you can request for that interest rate to be reevaluated.

Two different types of loans you can look at for a debt consolidation loan for people with bad credit are secured and unsecured. Now if you have bad credit, the unsecured loan is probably not for you. Approval for an unsecured loan usually takes a credit rating of 700 or more. A secured loan will be your best bet. A secured loan simply allows you to take something of value and use it as collateral. Lenders are usually looking for real estate or vehicles for this type of loan. Also a secured loan will get you a lower interest rate, even if you have bad credit.

Remember this is one of the first steps to improving your credit score and eventually you will be able to get the traditional loan with a great interest rate if you have a plan regarding your financial situation and stick to it.