High Risk Loans: Three Options That Suggest Greater Approval Chances
There is no doubt that, from the point of view of lenders, applicants with low credit scores are considered high risk borrowers. So it stands to reason that their financing opportunities are fairly skinny on the ground. But high risk loans are available if the search is in the right direction.
In many cases, getting approval with poor credit scores is not dependent on credit scores at all, but on the lender that is applied to. And sometimes the best option is outside the lending industry, to someone known on a private level, lessening greatly the risk of rejection.
Of course, affordability is always the key factor when applying for a loan, especially a private loan with bad credit. This may be confirmed through lower interest charged, or lower monthly repayment sums, but the loan type is telling too. Here are Trio loan options worth considering.
Option 1: The Payday Loan
There are clear advantages and disadvantages to selecting a payday loan. The most demonstrable advantage is that, despite its status as a high risk loan, it is the most likely to get approval on. This is because the loan is granted against an upcoming paycheck.
Securing approval with poor credit scores is almost certain because the approval process does not include a credit check. But there are some negatives to this option, not least the fact that a payday loan is one of the most expensive loan options available.
The likelihood of approval despite the high risk involved means that interest can be as high as 35%, and with repayment terms as brief as 30 days, there can be acute pressure to clear the debt. Also, as a private loan with bad credit, it is limited to just $1,500, which may fall brief of the required amount.
Option Two: Secured Individual Loans
The problem with high risk loans is that lenders are not fully coaxed they will get their money back. But when security is provided there is at least a way to be compensated. This is why a secured private loan is a surer way of getting necessary funds.
Also, with the thresholds placed on payday loans, it is the most practical way to secure loans more than $1,500 – all that is needed is collateral worth the value of the loan required. And because collateral overrides any issue of bad credit, securing approval with poor credit scores is a formality.
If an item cannot be found to match a higher loan value, for example $25,000, then a cosigner can be used. He or she assures the loan repayments will be made even if the borrower is incapable to. With this level of assurance, lenders are glad to grant the private loan with bad credit.
Option Three: Private Loans
One of the most cost-effective options is a private loan, also known as a family loan. Basically, a member of the family or a friend lends the money needed. Tho’ considered a high risk loan, the relationship inbetween lender and borrower is strong enough to overlook the credit status.
The advantage for borrowers is that the interest rates are usually non-existent. This is because family members usually do not attempt to profit from the transaction. Also, approval with poor credit scores is assured, and restructuring is effortless in the future.
However, be sure to agree terms, write them down and sign them to avoid confusion. And reminisce that repaying the debt will not affect your credit score. So, when approaching banks, seeking private loans with bad credit will remain the case.