Reputable lenders hope to educate consumers about their personal loan options in 2016. As the year starts, many people find themselves needing money for home expenses, tax liabilities and various financial hardships. There are several bad credit loans available to people with damaged credit, and these types of personal loans do not include astronomical interest rates or high fees.

Unsecured Personal Loan

There are a few different forms of unsecured personal loans. Some are offered based on credit history. Although people with marginal credit may still be approved, people who have very bad credit may only be approved for smaller amounts or will have higher interest rates. Signature loans are another example. The loan is secured by the borrower’s signature and promise to repay. However, maximum funding amounts are usually only about $2,500.

The best option for obtaining an unsecured personal loan with bad credit is to find one that is backed by a private investor. With investor-backed loans, an applicant’s personal story of why the money is needed may be used for approval. People with medical issues and other unique hardships are good candidates for these types of loans.

Second Chance Personal Loan

With this type of loan, a smaller amount is offered to people who have bad credit but want to rebuild it. It is usually not secured. Second chance loans are offered to people who have experienced crises such as illnesses, job loss or other hardships.

Home Equity Loan Or Line Of Credit

A home equity loan is a fixed amount of money offered by a lender, which is based on the borrower’s equity in his or her home. With a line of credit, a maximum amount is available to take out as needed. The borrower can take a portion of what is allowed or the full amount as necessary. In 2015, the average rate for a home equity line of credit of $30,000 was slightly less than 4.75 percent for people with good or average credit. Rates may be higher for people with bad credit and lower for people with excellent credit.

For home equity loans, the average interest rate based on an installment plan was 6.27 percent. Since rates for home equity loans are higher than those for refinancing, it may also be a good idea to look into refinancing. In some cases, the amount saved each month may be enough to pay off a large medical bill or other financial obligation if a monthly payment plan can be arranged.

Debt Consolidation Loan

For those who want to pay off outstanding debts but are drowning in high interest rates, this is a good loan option. These loans are only offered to consolidate debts and cannot be used for financial crises. The loan amount is usually enough to pay off debts or pay a considerable portion of them. Borrowers use the funds for those debts and pay a fixed monthly amount to the lender. Although interest rates are based on credit, the rates are less than the high rates on defaulted loans and credit cards.

Secured Personal Loan

Although most banks will not work with people who have bad credit, some lenders may offer secured loans to people with bad or marginal credit. In exchange for extending funds and a reasonable interest rate, the lender requires a form of collateral. This may be valuables, funds in savings, a vehicle or another asset that the lender can seize and sell in the event of the borrower defaulting.

Private Loan

People who belong to churches, associations or other organizations may be able to secure funding privately. Funds may be extended for small or large amounts depending on the situation or the organization’s financial capabilities. Interest rates are usually low, and some religious organizations may not assess interest.

There are other specialized loans for veterans, students and even senior citizens. For those who have marginal credit and need only a small amount, it may also be possible to find a credit card with a 0 percent introductory rate. This allows time to pay off a small debt with no interest. To find personal loans to meet monthly financial obligations, pay off debt or compensate for a financial setback, it is best to speak with an adviser. Bad credit loans are out there. However, finding the legitimate ones and sorting out the high-interest loans can be a challenge. An experienced adviser can help with the process.