During cash shortfalls, an unexpected expense seems to be a serious headache. It worries you as it threatens the savings that you may have built to fund your planned expense such as buying a house. In this situation, you will rush into taking out a loan.
While you have several small loan options, it becomes difficult to choose the one that suits your budget and credit needs. Despite lenient terms and conditions, you are likely to have your application turned down.
Your poor credit score may keep you from getting the best deal, but it will never discourage you from borrowing money as long as you have the repayment capability. Regardless of your credit score, you can take out bad credit loans with guaranteed approval. Continue to read this blog to know about these loans in detail.
What is “bad credit loan”?
A bad credit loan is not a different type of loan product. A loan that you borrow despite your poor credit history is called a bad credit loan. These loans carry high-interest rates as your creditworthiness is dubious. A direct lender will not run a hard credit check.
Instead, they will evaluate your income statement to determine how risky it will be to lend you money. Lenders make soft inquiries when it comes to approving an application with bad credit. Such inquiries do not show up on your credit report.
Do these loans require a guarantor?
A bad credit loan does not require a guarantor. Lenders understand that it is quite impossible to arrange a guarantor with a good credit history when you need money urgently. That is why they do not ask you to arrange a guarantor.
These loans are also called bad credit loans with no guarantor. An online lender follows simple criteria to approve your loan application. They will look over your incomings and compare them with your credit needs. You are likely to get less money than you quoted because of your affordability.
Can you pay off bad credit loans in installments?
The standard repayment time for a bad credit loan cannot be more than a month, but a few lenders provide bad credit loans in instalments. The repayment period can vary from three months to 12 months depending on the size of your borrowing. Instalment bad credit loans allow you to pay back in equal monthly instalments and hence they are more manageable than other loans.
Can you get instant payday loans with bad credit?
You can take out any small loan despite the bad credit. Payday loans are one of them. However, these loans work differently from other short-term loans. As the name suggests, these loans are paid in a lump sum within the two-week period.
Compared to other small loans, these loans may prove a bit expensive because you do not have even a month to repay. Make sure that you have analyzed your repayment capacity before applying for payday loans.
Can you get instant payday loans with no credit check?
Yes, you can take out instant payday loans with no credit check. Borrowers generally apply for these loans when they need money as fast as possible. You can get money within a couple of minutes as soon as the lender approves your loan applications. No credit check means neither hard inquiries nor soft inquiries will be made, which is why your credit rating will remain intact.
Are bad credit loans unsecured?
Yes, bad credit loans are unsecured. When you put in a loan application, the lender will perform the initial-stage shortlisting procedure and then let you know the amount you could borrow after evaluating your repayment capacity.
You will get funds in your account without the need for any formality of putting security. The significant reason for immediate disbursal of money is possible as it does not require the involvement of collateral.
What if you cannot repay the loan?
If you cannot repay a bad credit loan, the lender will impose late payment fees and interest penalties and inform credit reference agencies of your default.
However, they will give you a period of 30 days to settle your dues. If you clear all your dues within 30 days from the due date, you will not lose your credit score and no interest penalties will be charged.
This happens when your default is older than 60 days. If it continues, the lender will contact you via phone or emails to remind you about repayments. If you do not respond to messages and notifications, you are likely to have a CCJ issued.
You should immediately call your lender when you struggle to manage repayments. Your lender will be ready to accept the minimum amount and may offer you another repayment plan according to your budget.