Life is unpredictable and no matter how well planned we think we are, emergencies may often spring on us. Most emergencies require funds to get us through them so if you have an emergency fund then things are likely to be less difficult for you. For those who do not have an emergency fund, a personal loan can help you save the day. Well, this brings us to another hurdle that you may face in the event of an emergency. So what can be done in case you have a low score and need a personal loan to deal with an emergency? We have a few suggestions for you.
Getting a personal loan for CIBIL defaulters could be a challenge to say the least. However there are a few options that can help you deal with this situation.
Banks may be hesitant in lending to those who have a low score as they may consider them high risk applicants who are likely to default. This can be remedied if the applicant applies for the loan with a co-applicant who has a better credit score. A co-applicant with a good credit rating is likely to infuse confidence in the lender about the creditworthiness of the borrower. However there are certain rules regarding who can be the co-applicant and the co-applicant must have a good rating for this option to work.
If you work for an organization that has corporate tie-ups with banks then getting a personal loan despite a low score would not be so difficult. This is due to the fact that the lender is assured of your employability, the lender will be assured that as long as you get running income you are less likely to default. Corporate tie-ups can mean relaxation in the eligibility norms which can help you in getting your loan application approved.
This is another option that can help you deal with an emergency. Personal loans are unsecured loan so they are inherently high risk from the point of view of the lender. If you choose to borrow against an asset then the lender is not bothered about the safety of the funds as they have an asset pledge as security which can serve as a safety net. You could choose to borrow against bank deposits, gold, bonds, equity etc. Most lenders offer these loans at fairly simple terms.
Peer-to-peer lending websites allow the applicant to borrow despite a low score as these sites consider other factors also when the loan application is scrutinized. These websites are a form of crowd funding which bring the lender and the borrower together. P2P websites offer loans up to Rs. 5 lakhs and the loan duration ranges from 12 to 24 months. No collateral is required for these loans. Credit profile is given 50% weightage, other factors that weigh in the decision making process are applicants’ banking and social behavior, current payment pattern along with monthly outflow, job stability and family dynamics.
If the above options don’t work for you could consider approaching a NBFC for loan. These lenders may be more willing than the other mainstream lenders to sanction a loan despite a low score. Having said that do keep in mind the fact that personal loan interest rate is generally high and when you borrow from NBFCs it would be steeper; this would make these loans very expensive, thus one should opt for these loans after careful consideration.
Though we have discussed a few options that can help you in securing a personal loan despite a low CIBIL score but remember it’s always better to be credit healthy so that you are able to get a loan through the normal banking channel under any eventuality.