Today in this article, we’ll talk about different aspects of the loan. When it comes to loan apps, they are very popular in countries like Kenya & Nigeria. It helps you get the amount instantly. Quick check loan app is one of the most popular ones. The loan is provided by a lot of different organizations that include nationalized banks, direct lenders, banks like Gruh, SBI, Axis, HDB, gram panchayat area(India) and others. So, you can choose which entity you want to go for a loan. The amount required could be for a variety of reasons, you might need it for daughter marriage, for car or to buy a property. There are different provisions to take the loan; you can take it against unregistered, unbonded property, loan on ppf or any other asset you have. For more clarity, you can use the loan application tracker and Calculator. Loan calculator of SBI and HDB is very popular in India.
If you are a defaulter or looking for a waiver, then we’ll cover that aspect as well. People are also searching for loan amortization schedule on excel, foreclosure charges, EMI calculator for car, lump sum payments syndication, loan zero interest, syndication, Halifax and much more. So, read the whole article carefully, your all doubts will be sorted. In case you have any confusion, you can let us know in the comments below, and we’ll try to respond as soon as possible.
What is a Bad Credit Loan?
When you have a poor credit score, it becomes quite difficult to get the loan. But, still, there are some borrowing options that you can go for. These bad credit loans are the same as personal loans, and once you get the amount, you can pay it back in monthly installments. There are many options that you get when it comes to borrowing; you can go for a bank, credit unions, Online or Peer to Peer, and others. You can also take loans from your friends and family; there is also an option for finding a co-signer that you can go for. If you have an equity-like home then also you can get the loan no matter how bad your score it.
What Is a Bad Credit Score?
A lot of people are also asking questions about what is actually a bad credit score? So, basically, the credit score ranges from 300-850, the higher the number is, the higher the credibility you have in terms of repaying capability. All the credit scores which are less than 650 are considered as below average or low credit score. The lower the score you have, the more interest you have to pay over it.
Though, the definition of bad and good credit also varies from lender to lender. There are banks which don’t give the loan below 650 while there are other entities which easily give the loans over it. Below is the complete list of poor to excellent credit scores.
- 760-850 – Excellent
- 700-759 – Very good
- 660-699 – Fair
- 620-659 – Poor
- Scores under 620 – Extremely poor
How do Bad Credit Loans work?
So by now, you would have figured out whether you have a bad credit score or not. If you have, so now is the time to understand, how the bad credit loan works? So, the first thing that you have a bad credit score, the lender is going to charge you extra interest than the normal ones.
Now, if you ask why then it simply means that you have a bad credit score, then you have a bad history of your paying your debts. It makes things riskier for the lender to give you the money, and that’s why you are charged higher interest of rate.
Many times, banks have to deal with a lot of defaulters. That’s why they charge a higher rate of interest when they lend the money to someone with a poor credit score. According to the statistics, around 20% of people with poor credit score don’t pay the money back. The lending company has to make enough money out of that 80 % to compensate for the rest 20%.
The best option is to ask the money from your friend and family because if you borrow the money from any financial institution and you are not able to pay, this can ruin your financial life in the long run.
THINGS TO KEEP IN MIND BEFORE TAKING A PERSONAL LOAN
- Look at your Finances: Before taking a personal loan, you should explicitly check what your financial condition is. This thing, you have to keep in mind in all types of borrowings. You should analyze your current and anticipate your future financial situation. A personal loan is a good solution in case of emergency, but it is not taken carefully, it might cause serious financial trouble. Use the EMI Calculator, to know how much you would be paying every month and then calculate how much savings you have every month, deducting the expenditure from the earning. If the New EMI fits your family budget, then you are good to go. Otherwise, there is no point going for it.
- Other Alternatives: Before taking the personal loan, you should also look for other possible alternatives. Because interest rates in the personal loan are quite higher in comparison to the property, gold or vehicle loan, if you are looking for cheaper options, you can consider gold or top home loans as alternatives. In a Personal loan, the rate of interest might vary between 16 to 24 percent. So, don’t forget to explore other secured loans options, you might have to spare your assets as collateral.
- Decide the Amount Carefully: Most of the time, people borrow the amount more than they need. But it’s never recommended, what is the point of borrowing an extra amount, in which you have to pay an extra 20% interest rate? So, think carefully about the amount, you need. If you go to the bank, they might offer you a much higher amount depending on your credit report. Don’t get carried away by a higher offer; take only what you need. Because higher amount means higher debt and higher debt needs a higher interest payout.
- Talk to Friends and Family: If you are taking a personal loan because of a short-term cash crunch. Instead of going directly for a personal loan, better talk to your family and friends, if they can lend you some money. They might not even charge you any interest rate, but make sure you return the amount as promised; otherwise, you might jeopardize the relationship with your family and friends. So, think about it and if you have any close friend, talk to him with your situation.
- Check the Hidden Charges: Personal loans come with a processing fee, but sometimes, they add up extra hidden charges that you might not be aware of. So, make sure to cross check with the bank what are the additional costs, what is the processing fee? And how much you will be charged in case EMI gets bounced.
- Loan Duration: This is also a critical point that one has to keep in mind before taking a loan. Longer duration means you pay more interest amount. So, if you are able to repay the loan in a short period of time, go with a short period. Each bank has multiple options like One year, Three Years, and Five Years. It is the best option to check with the bank and financial institution from where you are taking the loan. There is one thing called, prepayment penalty. If you pay the loan before the due date, then you have to pay this penalty, so make sure you check everything properly.
- Read the Documents: This is a significant thing but mostly overlooked. You should read the papers thoroughly, what is written in every paper you are signing in. Sometimes, they ask you to sign on a blank paper; ask for the reason. Read terms and conditions properly, because sometimes, these bank executives won’t tell you all the things. But reading the whole document could be very hectic, so make you have a checklist like hidden charges, cancellation and foreclosure fees, loan tenure and how much interest you would be paying at the end of completion.
Pros and Cons of Bad Credit Loans
In this section, we’ll talk about the pros and cons of bad credit loans. We’ll cover both the sides. You can skim through this section, and you will have the clarity about both the aspects of it.
- Most of the time, the application process is pretty simple, and within a day, you get the money in your account. There are apps which will help you with fast processing.
- If you compare the interest of bad credit loan with credit card debt, then the interest rate is a lot lower.
- There are many lender options as well in case of poor credit. You can go with peer to peer option, banks, and other organizations as well. If you spend some time in research, you can easily find a loan option at an affordable rate.
- Here, you also have flexibility in repayment options. It can vary from one to five years depending on your repaying capability.
- If you are not able to pay back the loan, things might go really really worse. So, it should be the option only if everything fails.
- There are a lot of penalties and late payment fees in case if you don’t pay it back in time. Also, cross-check the processing amount while applying for this loan.
- Sometimes, you have to put your assets like a house or car on stake. So that in case you are not able to pay the loan, they will confiscate your asset.
HOW TO IMPROVE BAD CREDIT SCORE?
This is the question that a lot of people have been asking, how to improve my credit score. Below are some of the steps that you can follow and improve your credit score.
1. Are your Credit Reports Accurate?
Many times, what happens is that your credit report is not accurate. Everyone gets three credit reports by major bureaus which includes Experian, TransUnion, and Equifax. Very Often, credit reports have mistakes. Recently in a survey, it was found that every one in five consumers has an error in a credit report. As you know your credit score is based on your credit reports. Incorrect information can seriously harm your credit score. Most of these credit scores including FICO score as well come within the range of 300 to 850.
- Excellent Credit Score: 750+
- Good Credit Score: 700-749
- Fair Credit Score: 650-699
- Poor Credit Score: 600-649
- Bad Credit Score: below 600
Once you get all the three reports, there are a couple of things that you have to check to make sure that you are getting an accurate credit report.
- All your personal information is right or not.
- All your credit accounts are being reported or not.
- Are there any missed or late payments?
- Are there any pending loans that aren’t cleared till now?
2- Make Payments on Time
If you are having credit cards and making the late payments, then it’s undoubtedly gonna hurt your credit report. Late payments are the bad sign that you have to avoid. In case, you forgot to make the payment by mistake; you can ask your lender to forgive. Same goes with the loan, if you have any EMIs going on, don’t forget to pay the EMI at the right time. So, make payments on time, and it will help to maintain a good credit report.
3- Apply For a Credit Card if you don’t own one
Having a credit card with a good limit also adds diversity to your profile and which gradually help you to get a good credit score. If you have a good credit history, you will quickly get the credit card.
You also get some good bonus points if you have a good record of making in time payments.
4- Saving helps in Good Credit Report
Have you ever thought you could actually build a good credit report by doing savings? Yes, it is true. Most people live on credit cards, swiping the cards and paying the bills. But if you want to improve your credit report, you probably have to change your habit. Start focusing on saving some money as well. This also plays a huge role in deciding your credit score.
5- Dispute mistakes the right way
Sometimes, you might find significant mistakes in all three reports. In that case, you have to file a dispute through their online portal. It means they are taking someone else’s data under your name and that is really bad for your credit score. Once you filed an online dispute in all three bureaus, don’t forget to drop the mail with all your personal information and account statement so that they can cross-check the information with their database.
Types of Loans
In this section, we’ll talk about different types of loans that you need to understand. These loans will vary depending on your intention, length, your credit score, and other variables. So, let’s dive into each one of them and have a closer look.
Debt Consolidation Loans
This type of loan helps you to simplify your troubled finances. If you have several outstanding debts that might include credit card bill, car loan, and medical expenses. You have to go through lots of monthly payments, but when you go for a consolidation loan, it sums up everything in a single loan. It’s like a second loan on your multiple loans. Then you have to pay only one large amount once a month. The interest rate could be higher in this case.
This is the most popular loan that people go for. This is taken by students or their families to cover up the expenses of their higher education. No matter whether you are going to engineering, medical or any other course, you can get the loan. Sometimes, the college that you appear for plays a role in deciding your loan approval. There are private students loans, and then there are federal students loans. Federal ones are better as they have a low rate of interest and borrower-friendly as well.
This is also a very common type of loan that people go for. In this, you can use the loan for any purpose. You can use them for paying credit card bill, outstanding debts, or anything. This loan gives you the freedom to use the amount at your disposal.
If you want to buy a vehicle, then you should go for these auto loans. These loans will help you to afford a vehicle. But, there is also a risk factor attached to it. If you are not able to pay back in time, they will take back your vehicle. These type of loans are given by Car Dealership company directly; you don’t have to approach any company from your side.
Mortgages are the loans which allow the consumers to buy the home. They have very low-interest rates and very popular among US Citizens. But, make sure that you don’t fall back when it comes to the payment; otherwise, they may take back your home.
These types of loans are not recommended at all until or unless you don’t have any other option to go for. Here, the rate of interest is very high, and you will be living on paycheck to paycheck.
Small Business Loans
If you are entrepreneurs and thinking of starting your small business. You can go for these kinds of loans. There are separate organizations which only fund the entrepreneurs. In the US, we have SBA known as Small Business Administration which covers the funding for the small businesses.
Whenever you want to borrow the money, make sure that you read the instructions carefully. You should have clarity on the agreement that you are signing. Also, check what are the repayment terms, missing payment charges and hidden fees and others. For more information about loans, you can visit https://www.debt.org/credit/loans/.
Best loan approval companies in the US
In this section, we’ll talk about the best loan companies in the US and in which situation, you have to go for them. Some companies are good for consolidation loans, while other for Auto and Personal Loans. So, go through all the below-mentioned companies and then only decide which one suits you the best.
This Company is the part of Goldman Sachs group and one of the best company to go for. It offers personal loans and savings accounts. According to the company, their services are the best in the market. There are a lot of lending options they provide which includes debt consolidation, personal loans, credit card loans, personal loans, home equity loans, and others. The interest rate might vary from 6 to 25% APR depending on your credit report. Why i really like about this company that process is very hassle-free, and you get approval within 5 mins through their online portal.
This loan company is suitable for students and young professionals. They offer a variety of loans that includes student loans, mortgage loans, and personal loans as well. Apart from offering the loans, they also have services like wealth management, life insurance, and other bank account options. The interest rate might vary from 7 to 15% APR, and you can take the loan from $5000 to $100000 for 3-7 years. There are no hidden fees and charges while processing the loan.
If you are looking for personal loans, then Best Egg is one of the best company in the market. Apart from personal loans, you can also get debt consolidation, home improvement, and other options as well. The company offers the loan from $2000 to $35000, and the interest rate might vary between 6 to 30% APR, though they also have loan processing fee between 1 to 6 %. If you have a credit score of less than 640, then you can have a hard time getting the loan in the company.
This is a unique kind of loan company where individual investors join together to the fund the loan. You get very competitive rates in this case. Sometimes, the rate of interest is pretty lower than the other online and traditional lenders. Here, the loan amount will vary from $2000 to $40000 and interest could be from 6% to 35% APR. You don’t have to pay any prepayment fee, but there is one origination fee that you have to pay.
If you have loads of multiple loans on you and you want to go for debt consolidation, then this is the best option for you. This simplifies your finances, and all your multiple loans sum up into one loan. You can pay off your credit card bill, medical bill and other pending payments. The interest rate might vary from 5 to 22% APR, and you also have to pay the origination fee as well. If you have a credit score of less than 640, then you won’t be able to apply for the loan with the company.
If the payment flexibility is your top priority, then this is the loan that you should go for. More than offering you the loans, they basically offer you the lending plans to settle your finance system. It helps in adjusting your personal loans, home loans, and other loans as well. There is no origination fee with the company, and interest rates might vary from 7 to 19% APR depending on your credit score. The company also has a mobile app which allows you to have a quick hassle free approval. You can take $5000 to %75000 loan for three to five years.
All Loan Companies Comparison
|Loan Companies||Interest Rate||Amount||Duration|
|SOFI||6.99 to 14.99||$5,000 to $100,000||3, 4, 5, 6 or 7 years|
|Marcus||6.99 to 24.99 APR||$3,500 to $40,000||3, 4, 5, or 6 years|
|Prosper||6.95 to 35.99 APR||$2,000 to $40,000||Up to 5 years|
|Lending Club||6.95 to 35.89 APR||Up to $40,000||Up to 7 Years|
|Earnin||Very Low interest Rate||$100 to $500 per pay||Depends on Borrower|
|Payoff||5.65 to 22.59||Up to $10000||Up to 5 years|
|Earnest||6.99 to 18.24||$5,000 to $75,000||3, 4 & 5 years|
|Best Egg||5.99 to 29.99||$2,000 to $35,000||3 & 5 years|
How to choose a loan company
In this section, we’ll talk about how to choose a loan company. What are the things that you have to keep in mind? Before going for the loan, first, decide the amount that you need. Never take the loan more than the actual requirement. So, let’s go through all the below-mentioned points so that you don’t get confused while applying for the loan.
This is the most important factor that you have to check before going for a loan. The rate of interest will vary depending on your credit score. If you have a good credit score, then the rate of interest will be less if you have a bad credit score then the rate of interest will be higher.
You should always go with a reputable bank or organization. Sometimes, if you go with small brands, the things could be confusing, and in the worst case scenario, you could be scammed as well. So, before going for the loan, check the company’s reputation, read their reviews online and then only apply for the loan.
Also, check how’s the customer support of the lender. Who is your loan officer? Either he works for the lender or bank? Do they have any toll free number where you can call in case of a clarification? They should be willing to help you asap in case of any concerns.
Hidden Charges & Fees:
You also have to check what are the extra charges you are paying apart from the interest on the amount. You might have to pay origination fees, prepayment penalties, precomputed interest, and others. It is very important to go through all the documents so that you don’t end up paying the additional amount.
FAQS(FREQUENTLY ASKED QUESTIONS)
1- How can I get a loan without a credit check?
There are many peers to peer financial institution that provide you the loan even though you have less credit score. In the emergency, you can also go for payday loans. In that case, you have to go to the lender’s location and fill out the form and wait for the money. They might also ask for your income proof or bank statement, and then you are good to go.
2- What is a no credit check loan?
In this no credit check loan, your credit history is not taken into consideration. This case is a bit different than the traditional approach of loans. Here, you would get the funds, same day or the next day. In a traditional loan, banks or credit unions check your credit limit and other proofs. But, here you have to go through less red taping.
3- How do you get a loan from a credit union?
If you are looking forward to getting a loan from a credit union, then you’ll pledge some sort of collateral, which they can take in case of failure of payments. You can pledge your house, car, or jewelry. If you don’t want to go with those options, in that case, a cosigner can also help you get approved.
4- Can you get a loan with a credit score of 500?
It all depends on how many loans you want at this credit score. To get a loan approved at this credit score, you need to check with the banks. Different banks might give you a different amount of loan at the 500 score
5- Is a credit score of 550 bad?
Yeah, actually credit score of 550 is bad, and you won’t be able to get the loans very easily. We call this level a bad credit score or a subprime credit score. An excellent credit limit ranges from 740 to 850.
6- Is it possible to get a loan without a job?
A lot of people ask this question. Do I have to have a job to get the loan? You can get the loan even though you don’t have a job. These types of loans fall in a different category than title loans. In these cases, it depends on what kind of financial background you are having. If you have no job then, this is the best option for you.
7- How can I raise my credit score in 30 days?
There are certain things that you can do to get your credit score good in 30days. Below are some of them.
Correct any errors on the credit report.
Become an authorized user.
Make minimum payments on time.
Decrease debt-to-income ratio.
Have a good mix of debt.
8- How do I get my credit score up 100 points in one month?
This is again the kind of the same question that people ask for. Follow the below steps which are kind of similar to the above answers.
Pay due to accounts current.
Pay off any collections and charge-offs
Reduce balances on revolving accounts.
Apply for credit only when necessary.
9- How long does it take for your credit score to go up after paying off a credit card?
Credit Score Updates take some time. It’d be great if your credit score gets recalculated once you make the final payments. The Card companies usually report to major credit bureaus once in a month. Therefore, in that case, it may take up to 30days to show any actual improvement.
10- What is the minimum credit score to get the loan?
The minimum credit for a personal loan is generally 750. If you have a credit score more than this, then that’s better. Any score above this would mean that the applications are processed without hassle. In general 300 credit score is on the lower end and 900 on the higher end.