What is a Bad Credit Installment Loan?
Bad credit installment loans are designed for the customer who has a bad track record in loan repayment or has no substantial proof that they can repay the loans. Lenders deny giving loans to the people who have a low credit score or bad repayment history as they are considering the borrower a defaulter. If the loan is not recovered then the loss is of the bank and the person who sanctioned the loan will be held responsible for it. These loans are generally installment loan alternatives like mortgage loans or secured loans as the loan is given against a property having the valuation higher than the loan amount.
Why a Bad Credit Installment Loan Taken?
We generally have a low credit score for the following reasons:
- Non-payment or untimely payment of installment loans.
- Failing to pay a credit card bill.
- Never take a loan and not even in a financial position to take one.
A bad credit installment loan should be only taken when,
- There is no other way to manage current debts or the present situation.
- All the lenders have turned their backs on the borrower by rejecting the loan application.
- The borrower is a credit card defaulter or defaulter in other loans.
- The borrower is at a stable financial position where he can repay the loans and make his credit score high.
Things to Keep in Mind before Taking a Bad Credit Installment Loan
- In spite of having a low credit score, the borrower can get a loan if he can persuade the lender by showing that his income has increased and he can re-pay the loan.
- If the collateral is provided against the loan then the chance is more to get the loan.
- The borrower should find another co-applicant who has a good credit score. If he does then the chances of getting the loan increase.
- Proper research should be done before taking the loan because one must go with the company charging the lowest interest.
- When the credit score is already low, it is better to be sure before applying for a loan because if it gets rejected then the credit score gets further low.
- Go through all the terms and conditions before applying for a loan to get rid of further harassment.
Drancy.net Explains the Credit Score
The first thing which one should know is which score defines the good, the bad and fair credit score:
- A credit score with 750 and above is considered to be a good credit score.
- A credit score between 625 and 749 is considered to be a fair credit score.
- A credit score between 624 and below is considered to be a bad credit score.
Hence, it is always advised to keep a credit score above 750.
The loan amount varies from lender to lender and there are above-discussed factors too. Generally, the lenders give a loan ranging from $500 to $10000 according to Drancy. The processing might take around a day and if it is sanctioned within a day or two, the lenders will call the borrower before disbursing the amount into his bank account.
Documents and Other Eligibility Criteria to Avail Bad Credit Installment Loans
- Personal identification document.
- Salary account statement of last three or six months.
- House agreement copy for the owner or rental agreement copy for the rented person.
- Passport size photo.
Basic Criteria according to Drancy.net
- US citizen.
- Above 18 years of age.
- A salaried or self-employed person with proof of income.
- Eligibility to pay the loan installments in time.
Hence, if everything goes the right way, getting a bad credit installment loan is a piece of cake.