BAD CREDIT LOANS
Shopping for a cash loan when you have bad credit can often be a daunting task. Not only is it frustrating, often times it can be an embarrassing experience. A bad credit loan is for people that cannot get pre-approved for any kind of loan through traditional lending sources such as local banks, credit unions, or the lending arms of retail institutions.
Unfortunately, these lending sources typically do not lend to people with low credit scores, a recent bankruptcy, no down payment, low income, or a history of repossession. In the case of many lenders who offer options to people with bad credit, it is a mandatory requirement to oversee information such as bank statements and proof of income. As much as these institutions serve the forgotten group of people who can’t obtain loans the traditional way, it is important for them to secure some surety of repayment.
For most credit-challenged consumers, the inability to locate a lender that offers loans for people with bad credit takes them down the unfortunate path of dealing with unauthorized ‘lenders’. Working with “these lenders can be a problem because, in most cases, they mismanage consumers’ sensitive information, more times than not using it to defraud unsuspecting victims.
In addition, these types of lenders do not always have the best reputation and may charge very high interest rates and finance charges. This is not to say that all bad credit lenders are bad but you need to be careful.
Taking on a bad credit loan, in a responsible fashion, leaves an opportunity for bad credit consumers to improve their credit score. Securing a loan with a reputable institution for bad credit results in the credit scores and history of poor credit consumers improving further.
This form of lending is not suitable for people with a destructive financial cycle of high down faulty repayments and loan defaults. The only way a bad credit loan can be beneficial for you is if you need it for emergencies knowing that you have the means to repay the full amount in time.
The first bad credit loan requirement has to do with income. For most loans with bad credit, the lender will require a minimum monthly payslip with proof of income that can be verified by your employee. The reason for this requirement is that it addresses your gross income, meaning that the amount you are paid before withholding. Lenders generally require this standard minimum income so that they can be sure you can afford their repayment options in addition to your other bills.
For the most part, the only requirement to get approved on a bad credit loan is a valid payslip.
Unfortunately, due to current economic conditions, most bad credit lenders will most likely not accept your application if you are an independent contractor or are self-employed. Lenders that may consider self-employment income will generally only do so with three previous years of income tax statements that have been prepared in a professional fashion. In fact, you may even be required to supply the lender with bank statements in order to support your stated income.
The best way to ensure that you put yourself in the best position to secure a loan with bad credit would be to validate your paperwork and consult a reputable lender.
As beneficial as it is to have the option to get a loan with bad credit, it is important to have the surety of funds available when the time comes to repay the full amount, as this directly impacts your credit rating.