When you are going through debt and financial emergency strikes, don’t worry as there are options for emergency cash with bad credit loans. Saving money is essential as no one expects things to go wrong. The pressure to get an emergency loan can be very stressful and these emergencies include medical bills, rent, legal fees, funeral costs, overdue bills, significant repairs to your car or home and more.
If you wish to avail a loan but cannot because you have a poor credit score, then bad credit loans are meant for people facing this issue. These loans are secured and can be availed easily by any individual with a low credit score against the collateral he or she pledges with the moneylender.
What are bad credit loans?
Bad credit loans are types of loans that can be acquired by people who have a poor credit score. This loan is helpful for applicants whose loan requests get refused due to their poor ratings.
When do people need Bad Credit Loans?
An individual needs bad credit loans under the following circumstances:
- The applicant has defaulted on their previous loan payments.
- He or she has defaulted on their credit card payments.
- The applicant has never taken a loan and has no financial track record
- A previous loan application has been rejected based on bad credit ratings.
Following are the features of Bad Credit Loans:
- These loans are given at the lowest interest rates.
- The applicant’s credit history is not taken into account when you apply for such loans.
- The loan processing is quick.
- The loan duration is also flexible.
- You are eligible for loans based on the condition of your car which includes the year, make, model and mileage of the car.
Benefits of Getting Bad Credit Loans:
- You don’t have to worry about losing your property or assets.
- High loan amounts can be availed.
- It requires very minimal documents to get approved for such a loan.
- There are no hidden fees involved.
- You get cash in hand on the same day of approval.
- You can utilize your car fully while making loan payments.
How Are Bad Credit Loans different from other unsecured loans?
- Your car, which is used as collateral has to be given to avail the loan.
- The interest on these loans is low, though not as low as the rates given to borrowers with good credit scores.
- The loan tenure is quite flexible.
- The loan amount borrowed depends on the value of the asset that has been pledged.
- Unemployed individuals can also apply.
- The loan approval process is much faster as against an unsecured loan.
Why Should People Apply For Bad Credit Loans?
- Individuals can apply for big loans as the loan amount is based on the value of the collateral.
- You are bound to get better terms and conditions than what they get for unsecured loans.
- People with a poor credit score can apply as well for bad credit loans.
- You can easily apply for this loan offline and online.
- The tenures of bad credit loans are flexible.
- The minimum income requirements are on the lower side.
What is the eligibility criteria when you go for such loans?
- You must have a valid government-issued id.
- You should be minimum18 years of age.
- Registration and insurance must be in the name of your vehicle.
- Your car must be fully insured.
- A clear title in the name of your vehicle is essential.
- Spare keys to your car.
There are some fundamental differences between a secured loan and an unsecured loan which can be explained as follows:
Collateral: In secured loans, there is no requirement of collateral, whereas collateral is required for an unsecured loan.
Interest: The rate of interest for secured loans is comparatively lower than unsecured loans where the interest rates are high. This is because the risk for the bank is more in unsecured loans.
Tenure: The loan period is quite flexible in secured loans. It can be taken for a more extended period of time. But in the case of unsecured loans, the loan terms are shorter.
Loan Amount: In secured loans, the amount of loan which you borrow depends on the value of the pledged property. In unsecured loans, there are no such restrictions as the loan amount is decided after checking the repayment abilities of the bank.
There are certain factors you should keep in mind when applying for a bad credit loan :
Collateral: To avail the loan, property or asset has to be given to the lender. In case, if you fail to repay the loan, the lender will sell it off to recover their money.
Loan Size: The size of the loan will depend directly on the value of the property pledged.
Full Ownership: The applicant should be a complete owner of the property being used as collateral.
If you want to manage your debt and get relief from it, then you can undoubtedly go for bad credit loans which help you obtain money as fast as possible.