Bad credit loans with quick guaranteed approval
The main reason loans are popular or work is because of the time the loan is required. The quick approval loans or Insta-loans as some banks call them are there for the sole purpose of satisfying an emergency any person will have. These are multi-utility loans i.e. can be used for anything like marriage, down payment for a home, medical expenses, education purposes etc.
These types of loans are generally given to existing customers of banks who have a very good credit score. What about those customers or new customers with bad credit score where will they get funds for emergencies. This article is for those people.
What is a credit score and why is it important?
A credit score is a cumulative number or an aggregate based on all the loans and repayments that you have done. It takes into consideration the loan you have taken and how regular you have been on your payment. The reason credit report and credit score is given so much importance is because it determines most of the attributes of a loan – Interest rate, tenure, loan amount etc.
So, if you have missed or have late payments on your credit report, then your score will be low. Banks generally prefer people with a credit score of 750 as an ideal borrower. Anything below that your rate of interest(increase), loan amount(decrease) and tenure(decrease) will get affected.
What are the options available to a person with bad credit score?
The best option for anyone with a bad credit score, to get loans approved instantly is to pledge a collateral such as property or gold to get a good loan deal. With the collateral they can ask for better interest rates. These types of loans called secured loans are the only way people with bad credit can get instant approval loans from banks.
But if you are looking for unsecured loans i.e. not fronting any collateral then you need to have good income and working in a highly reputed company –for at least 2 years then you will be eligible for an instant loan from the bank you have your salary account.
Then again, the biggest challenge you will face is that you will get unattractive interest rates. Banks consider the risks in giving you an unsecured loan and will demand a higher interest rate. In some cases, the banks may reduce the loan amount. For example, if in normal circumstances your amount eligibility for a home loan is around 80% to 90% but because of bad credit score you will probably get only 65% to 70%.
Your loan tenure will also be shorter as banks will look to collect the loan as quickly as possible.
There are 2 options apart from banks that a person with bad credit can try.
1. Peer to peer(P2P) – There are some website offering peer to peer(P2P) loans up to a maximum of 5 lakhs for tenures ranging from 12 – 36 months.
2. NBFC – There are some NBFC who provide loans for people with bad credit. They will charge a little bit higher interest rate.
Credit scores are mighty important when applying for a loan especially an unsecured loan. For you to get instant approval loans from banks you need to be an existing customer from a highly reputed company. Th only other options available for people with bad credit are NBFC and P2P lenders.
To get the best loans it is necessary that you maintain a good credit score by trying and paying your dues on time. In case you are looking for ways to improve your credit score you can contact experts or credit coaches like CreditMantri to help you improve your score to get the best deals on credit cards and loans.