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Have a bad credit history? Here's a loan just for YOU!

Last updated on: February 2, 2012 15:39 IST

Have a bad credit history? Here's a loan just for YOU!

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Vaibhav Aggarwal, Rupeetimes.com

Just because you have some blemishes on your credit score card or an uneven income stream shouldn't disqualify you from getting a personal loan.

Almost every body comes across financial emergencies. At such times personal loans can be a godsend. But if you have the misfortune of having a bad credit history then will you be able to avail a personal loan?

The introduction of bad credit personal loans resolves this problem and comes as a blessing for borrowers who are refused credit on the basis of a few poor points on their score cards. Bad credit loan is a kind of finance that is especially designed for people with a bad credit history.

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Such loans have flooded the market over the past few years. However the conditions under which you can get such a loan can vary significantly. For instance if your credit rating is horrible or you have filed for bankruptcy, you may find that your options for personal loans are relatively limited.

One of the biggest advantages for these loan types in comparison to secured loans and mortgages is that you are not required to produce any collateral against your loan. But at the same time it is very important to make timely payment on your loan amount every month.



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The interest rate charged for such a loan is relatively high because lenders use the borrowers' credit score as basis while approving the loan and since the borrower has a bad credit history, interest rate charged is high. It is basically the price that a lender charges for taking a high risk.

The interest rates for bad credit personal loans are calculated taking into consideration the market interest rate at the time when loan application is made and the particular risk of the personal loan in question. However different lenders have different interest rates and therefore good research will help you to arrive at the best-offered deal according to your profile.



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On the other hand be aware of your rights as a bad credit borrower. Always remember that the right to extend bad credit personal loans remains with the lender. There might be a situation where a lender may draw a line on how much risk he is ready to take. This means that a bad credit personal loan may not be offered to you if you are a case of serious debt.

As a borrower of a bad credit personal loan, you should know that though credit scores are fundamental to loan borrowing they are not the only deciding factor. Regular income, good job history, equity, savings and collateral will all play an important role in getting the bad credit personal loan approved. These factors would help you in enhancing your credibility as a borrower.



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Moreover a bad credit personal loan not only provides a solution to your financial needs, they also you give you the opportunity to rebuild your credit scores. You should make sure that your repayments for bad credit personal loan are made on time because defaulting on a bad credit loan would only increase your problems when it comes to borrowing the next time.

Here are few suggestions that can help you grab the best bad credit personal loan in the market.



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First and foremost you should try to improve the points on your score card by making all the current payments on time and reduce the credit enquiries you make. It will help you to scale up your scores and thereby avail the loan at cheaper interest rates.

Secondly a person with bad credit history must save enough to make the down payment. The lenders who agree to extend the loan amount at low interest rates might demand for a substantial amount of payment in the form of down payment. So ensure that you have sufficient funds in your account for making the down payment.

Lastly borrowers should ask for quotes on interest rates and terms from various lenders as it might help them to reduce the cost of a bad credit personal loan. To get the loan application approved, one should apply to all the online brokers who will further send your application to various lenders. Note that different brokers deal with specific type of lenders, so search out well and take the best option that can be availed.



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