Note that there may be plenty of advertisements from online lenders touting unsecured installment loans up to $5000 and no faxing. Usually, the approval clause is for smaller loans up to $1500. So if you intend to borrow $5000 for 12 months with bad credit, you better earn more than the $1000 monthly basic requirement. Even if you can find a private lender willing to lend you money, be a responsible borrower and stay within your limits.
You have bad credit, which is why you cannot get cheaper loans from the bank. This is not a problem as long as you have have calculated that the higher interest rates from poor credit loan companies are still affordable based on your income. A good estimate is to use 30% of your monthly income as your borrowing limit. If you are going to take a short term cash advance for 30 days and you earn $3000, you should not borrow above $1000. And for long term bad credit installment loans up to 12 months, your current income level limits you to a maximum of $10000 unsecured loan amount.
The more you borrow on unsecured installment loans for people with bad credit and the longer your term, the more difficult it is to pay back completely. You will not want to be a slave working day and night to meet the interest payments, so be very careful not to over-borrow from high risk loan companies.
So when banks refuse to grant you a personal loan unless you put down some collateral, take that as a warning you are facing credit risk. Avoid adding more long term financial commitments until your credit improves and you qualify for cheap unsecured loans from banks. Meanwhile, you can still try new monthly installment loans, but these should only be used provided they improve your financial standing, such as helping you to rebuild your credit history.
Yes, it is common to use unsecured installment loans for rebuilding credit, aside from borrowing money for personal expenses. As the monthly installment payment is smaller and more manageable, you will be able to pay on time and this is good for your credit score. Note that private lenders that do not report to the credit bureaus such as Experian, Equifax, TransUnion etc will not help your credit rebuilding, so you need to find legitimate loan companies that gives $5000 installment loans for people with bad credit.
However, sometimes you can only borrow from private lenders with very bad credit, then you have no choice especially when it is for a real urgent expense. It should be common sense to tell that you will not be able to improve your life if you are continually borrowing money from others whether with good credit or no credit. Restrain yourself not to take the easy way out via bad credit installment loans up to 12 months just to buy yourself some time.