Having a bad credit score used to be a nightmare for everyone. The reason is, a poor credit rating is a red flag to traditional lending institutions. If you have a bad rating, you wouldn’t be able to secure a loan from financial institutions like banks, unless you can present a collateral. Although until today a good rating is still one of the major requirements to secure a bank loan, a new division of the lending industry has changed this lending standard.
Lenders offer loans even to people with poor rating or no credit history at all. These lenders believe that your rating is not the only primary basis for your credit worthiness.
What Kind of Loans Do Bad Credit Loans Lenders Offer
Here are the main features of bad credit loans.
1. Bad credit loans are online loans, which means you don’t need to personally appear in front of your lender to apply for one. You can apply for a loan via the lender’s website and send in the requirements electronically.
2. Bad credit loans are usually unsecured loans, which do not require any form of collateral. So you don’t need to risk a property against your loan.
3. They are also fast loans. In fact, they are sometimes called “ instant cash advances” because of the speed of approval. Lenders may grant you the loan in as fast as minutes to 24 hours.
4. Bad credit loans online only offer between $100 and $1,500, depending on how much you earn per month. However, there are also some online lenders that offer up to $15,000.
5. High Interest- Because of the risk the lenders are taking on granting these loans, they usually charge higher than usual interest rates.
6. No credit check is required, which makes these loans perfect for those who have a poor rating. Although designed for poor creditors, people with good credit standing may also apply for these loans.
7. Bad credit loans are usually short-term loans, with payment period of between days to 2 months. The repayment period vary per lender and the type of bad credit loans you applied for. Some lenders only allow 15 days for payday or cash advances, while others allow up to 60 days.
8. Higher Approval Rate- The reason why there is higher approval rate is because these loans have minimal requirements. First, no credit check is required for these loans. Second, you just need to submit basic requirements such as proof of income and identity. As long as you are an American citizen and can prove that you can pay for the amount of loan you applied for, you have higher chances of getting approved.
9. Application is easy and convenient. As mentioned, you can apply for one online. The best thing is that you don’t have to personally appear at the lender’s office to get the approved amount because the lender will just deposit it into your bank account. Payment will also be very convenient as it will be automatically deducted from your bank account on the due date.
Bad credit loans are indeed great sources of funds. However, because they have short repayment period and they are small loans, they are ideal for immediate cash needs.