Before we dive into this topic, it would be helpful to clarify a few things regarding loans. If you are employed, you might have heard of payday loans. As the name states, these are tailored for the low-income earners and are usually repaid in a lump sum within a short period. It is worth noting that not all countries have legalised payday loans.
Installment loans, on the other hand, are long-term loans (3 – 18 months) and one can borrow above $1000. Among its benefits is the fact that you can repay in installments. Another advantage is that you can apply to them even if you have a bad credit score.
Owing to the current financial situation, it can be quite challenging to make money at home. Perhaps borrowing a loan is your best bet, but what if your credit score is below 630 (poor)? Well, don’t panic! Here is how to borrow installed loans for bad credit applicants.
What is the borrowing process?
Like any other loan, you will need to fill out an application form when you need an installment loan. First, it is essential to find a reputable lender. Several approved institutions are offering online installment loans for bad credit in the U.K. Once satisfied with their history; you will be required to fill in all your details as accurately as possible.
Remember, the lender has the right to either approve or decline your application. If you meet their minimum requirements, you can move to the next step. What do you need to qualify? This is a subjective question since every institution has its policy. Generally, the applicant must be above the age of 25 years. You should also have an income of at least the amount set by the lender.
Of course, there is a maximum amount you’ll be eligible to borrow depending on the qualifications. While applying, you can choose the number of days or months within you’ll be able to repay the loan. Once approved, the cash will be deposited in the bank account provided by you. It is crucial to note that most of these loans build up their interests from the first day.
I have bad credit – what do they use to vet applicants?
Glad you asked this question because it can be quite confusing. Traditionally, lending institutions like banks and private firms use one’s credit score to see if they qualify for the loan. Well, this can be frustrating for those whose credit score dropped due to falling behind on previous repayment schedules.
One of the main factors put into consideration is your income. There is a huge possibility that you’ll struggle to repay a loan of $10,000 if your monthly payslip reads below $1000. The lender, therefore, will weigh the amount they deem comfortable for you and set a limit. Of course, this comes after you have passed all the other checks.
Another thing that will be thoroughly examined is your employment history. This information can go a long way in deciding your financial capability. Although it is not necessarily true, someone who has been employed for long might be able to repay the loan easily because they have already settled financially. It could also be used to vet your behaviour and discipline.
Your bank account will definitely be on the table when deciding your eligibility. How much is deposited monthly? How first do you spend the money? These are some of the questions the lenders will ponder on before the final resolution. Other factors include your proof of residence and proof of identity. They might seem minute, but these are the simple things that can disqualify you.
How long will the approval stage take?
If you are confident that you meet all the above requirements as stated by the lender, all you need to do is wait. The amount of time here will vary with institutions and whether they are servicing other borrowers. Generally, you’ll have to be patient for a few hours or days before you finally get a response.
What to keep in mind before borrowing an installment loan for bad credit
When it comes to money, excitement can cloud your judgment. Well, don’t let it because you could find yourself in a lot of trouble. Once you have found the right lender and you qualify for their loan, go through the contract. Remember, this is not the traditional “terms and conditions” page that you always skip.
Once you signed this contract, you’ll be accepting whatever the lender needs. Some people have seen some of their assets confiscated because they signed the contract blindly. That said, it doesn’t mean every lender has terms that you can’t meet. In fact, most of them are affordable by low-income applicants. It is upon you to decide whether what you are signing is good or bad debt.
What can you do to increase your chances of qualification for an installment loan?
So we have seen what you should do before borrowing, what about during the application process? Although the credit score criterion is out of question, it doesn’t mean any institution is going to hand you the loan. You’ll have to earn their trust, and that can only be reflected in your application.
Therefore, make sure you fill out all the sections as accurately as possible. Any faking could disqualify you, not to mention the legal actions that might be taken by the lender. It goes without saying that the more institutions you apply to, the higher your chances of getting a loan.
Everyone goes through a rough financial time at some point in their life. As such, it is normal to opt for an installment loan due to a bad credit score. Fortunately, many finance enterprises are willing to offer such loans but under given conditions.
We recommend trying as many institutions as you can because not all will accept your qualification. However, be careful not to fall into the temptation of borrowing from all that you qualify for. This move could have severe repercussions on your already tight financial situation. In other words, discipline is vital when it comes to loans.