What in the devil does Risk Mitigation mean? Well, the phrase is primary in the mind on any lender who makes personal loans. Every lender in the world who likes the idea about getting loans they make paid back — about every last one of them — carefully balances the interest rates they will be charging against the possibilities of them not getting paid back. Mitigation means making something less painful should it happen. Ergo: Poor Credit = Higher Interest.
Factors exist that concern lenders when they look at the probabilities of being repaid: The Amount of the Loan. The Borrower’s Credit Score. The Type of Loan – Secured or Unsecured (whether or not the borrower has something of real value to give the lender should the borrower default on the rates and terms of the loan.) Note: Terms usually means conditions of repayment, such as time and amount.
Not So Guaranteed
Regarding these factors, it is easy to see why it is virtually impossible to say that any loan is 100% guaranteed. Especially not a bad-credit loan. Of course, if you are in need of cash fast, the idea is a utopian ideal. So, let us clear up five legends surrounding 100% guaranteed bad-credit personal loans.
The First Legend — Everybody Is Guaranteed to Qualify
The law does not object when a lender refuses a loan to any given borrower. So, the 100% guaranteed personal loan basically does not exist. But, figuring out how and where to look puts a lot of plus points on the side of qualifying for a loan. No matter what your credit scores may be.
The Second Legend — Bad Credit Means No Approvals
Entirely not true. In fact, there are whole leagues of lenders who specialize in working with borrowers who have bad credit. Though not exactly arcane, these lenders have unique ways to evaluate their risk in lending to any given individual. These go far beyond just considering numbers on a credit score card.
The Third Legend — Bad credit Means Very High Interest Rates
While is is true that lenders will nudge interest rates higher for folks who have bad credit histories, that does not necessarily mean that those folks will pay exorbitant interest rates. This is especially true if the borrower is able to come up with collateral, such as property or a pay check.
The Fourth Legend — Apply Only to One Lender
Truly amazing: Many folks who are need of an infusion of cash, apply to to one lender, get rejected, and give up. Even with good credit, folks should apply to four or five lenders. One will come through and you will probably get a better rate to boot.
The Fifth Legend — Bad Credit Means Only Small Loans
Just as a lender will come through for a loan, some lender will come through to give a bad-credit borrower the sum they need. $2,500, $5,000, $10,000 or more are not unheard of for bad credit borrowers.
Someone Will Come Through
Well, now that we have laid those legends to rest, get to work on finding the cash you need. Someone will come through for you in spite of your bad credit.