Imagine you are in urgent money to adhere to a desperate need of the hour. You have tried each and every thing like, asking your friends and family, checking your savings, etc. the last resort is to get a personal loan. You quickly apply for one and hope that you will get it sanctioned within no time. All of a sudden you receive a call from the bank stating the loan is rejected because of a low credit score and you are left with no other option.
Now you are in a fix on how will you be able to arrange urgent funds, with all the available options exhausted?
A bad credit loan is one type of a personal loan which is offered by bankers and lenders for people who have low credit score. Yes, you saw right! There are such types of loans available in the market which helps with loan for bad cibil score.
One main characteristic for this type of a loan is that they are very expensive to avail. You will encounter heavy processing fees, higher interest rates than market standards and high pre-payment charges. This is a very expensive deal when it comes to loans but if you are in need, you will have to avail it by hook or by crook.
You must be thinking if I happened to have a bad credit score that does not mean I will have to pay high interest. The answer to this is sadly a yes.
When you are applying for any loan with a bad credit, the lender already knows that you are not serious about managing your funds. This means the lender is already at risk when he is considering your profile to get you a loan. To compensate the risk, lender charges you higher interest rates. This may seem an easier way to get out of whatever financial crunch you are in but in the long run, you will be able to see that this is an expensive affair.
There are two types of bad credit loans,
This is just like any another traditional personal loan, credit card or education loan. The only difference here is that you will be paying high interest rates and you will be in close surveillance of the lender. If you accidently skip even one installment, they will be all over you with collection calls etc.
The lender will ask for collateral like a car, gold, property papers, etc. and you can avail a secured loan. If the borrower is unable to pay the installments in time, the lender has the power to confiscate the collateral with prior notice off course.
Typically they are not. When you apply for a loan and the lender performs a credit check on you, then you are in good hands. If the lender is not performing any check and offering you a loan, this typically means that they don’t care for you and this might not be a responsible loan.
Yes, it definitely will! If the lender provides information to the credit bureaus and you are making regular payments, you can see a growth on your credit report. The cibil score calculation can only be done if the lender passes your information further. This cannot be a case, if you have borrowed money from a private lender who does not even know what a cibil score is.