Most common confusion around the concept of bad credit loans is that only lenders who wish to earn from other’s misery lend them on higher rate of interest to people who seem unable to repay these loans or money or seem in desperate need. Ironically, this would only categorise the keen bad credit lenders ad philanthropists, who will want to help the poor and the needy without any expectations of their own or as greedy butchers who wish to become rampantly abusive in their use of power and money. But to no avail! In the financial market, bad credit loans are nothing but yet another organization with yet their set pre-requisites. And since, everyone in the financial market is keen on profits therefore nobody is the super greedy green-eyed monster trying to lynch money from individuals when they are at their worst or suffering from the most desperate situations.
But since the truth about bad credit loans and bad credit loan lenders is diverse and very different, we bring you both the perspectives on the platter. Read them, and side unbiased:
Bad Credit Loans: The Lender Story As a lender who is approached with a loan request, one is only looked upon as an opportunity for business. An individual who, in the past, has failed to honor his debts on time, who has borrowed too a lot funds or who has even defaulted/gone via a bankruptcy. This is what a lender discovers by the only source that he/she can trust the credit rank report. So how can the borrower, who has failed to repay, has been closely scrutinized blame the lender for his poor credit tag?
For the lender, let’s face it, it is a business opportunity that he will not rate by trust, but by risk positioning. A bad credit score screams “risk” and the lender takes note of that. A lender does not make cash with a single loan, in order for his organization to work he has to lend to several folks. Considering records and past experience, bad credit borrowers misstheir payment cycles most often. That explains the high rate of interests on bad credit loans. They are a contingency provision just in case; there is no possibility of recovery of the loan. It might look like a burden to the audience, but how does anything else explain an gratify bad credit loan lender’s profit making venture.
Bad Credit Loans: The Borrower Story
The other party is in desperate need of funds. Here comes another emergency and now, it has become inevitable to arrange for money. Some past financial goof-ups have now made it difficult, from which this person has learnt bitterly. He/she knows he will not make the same mistakes any much more and wishes that lenders would trust this claim to be accurate. The borrower will always try to show an impeccable credit history to the lender. And that is needed too! Even if the past mistakes are still in your credit report, the last six months of your credit history should be clean of late payments and missed payments else you’re in the highest risk bracket.
It boils down to higher interest rates, lower loan amounts and non-flexible repayment programs. The terms of the loan are not advantageous but as a bad credit borrower does not have many choices to pick from.
The Bottom line
If the borrower uses the funds wisely and pays his instalments on time, this gets recorded in his credit report slowly and gradually improving his credit position, raising the bar against the borrower’s name improving his financial terms for the future. So remember, there are situation from which there is no out other than a bad credit loan. The benefits from a bad credit loan in terms of improving one’s score and meeting the urgency compensates easily for the high rate of interests, especially if you consider the risk involved for the money lender.
If the borrower uses the funds wisely and pays his instalments on time, this gets recorded in his credit report slowly and gradually improving his credit position, raising the bar against the borrower’s name improving his financial terms for the future. So remember, there are situation from which there is no out other than a bad credit loan. The benefits from a bad credit loan in terms of improving one’s score and meeting the urgency compensates easily for the high rate of interests, especially if you consider the risk involved for the money lender.
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