Personal loans for bad credit
There is a surplus of liquidity in the market, banks like every client they can borrow money for. Against this, strict legislation (Consumer Credit Act), which directs bank and non-bank lenders to thorough client lustration. Banks can not borrow us without being convinced enough that we are able to repay the loan. The client would otherwise be in a position to contest the loan agreement for its invalidity, which would have had unfortunate consequences for the creditor. The borrower would not pay any interest or fees (the amount already paid would have returned) and the borrowed money would be repaid to the bank according to its possibilities. For refused loans, let’s not look for banks’ reluctance to borrow, but very strict legislation.
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In order to get our debts to be repaid, we need a regular income from employment that guarantees a contract of indefinite duration. If we have a fixed term employment contract, we can still get the loan, but the maturity of the loan can not be longer than the “fixed term” agreed in the employment contract. We must not be in probation or notice period. In the first case, there is a risk of loss of employment and income from day to day, in the latter case a probationary period of 3 months is still waiting for us in a potential new job.
Loans for people with bad credit
Our payment morale is recorded in the registers. In the case of proper loan repayment in the past, we get positive points. Conversely, delayed repayments may warn future creditors of our lack of solvency. Not only bank and non-bank loans are recorded in the registers, but also energy, mobile and other liabilities. Banks usually take into account all records for the last 4-5 years. Unsuccessful credit applications are seen in the registers, so if two banks refuse to do so, it does not make much sense to try it with a third bank that sees two rejected applications in the system.
- American Banking Credit Bureau
- Non-Banking Client Information Register (American Non-banking Credit Bureau)
- Interest Association of Legal Entities (abbreviation originates from the original name of the Association for Protection of Leasing and Consumer Loans)
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If we are in execution, then we are not able to repay our current liabilities that creditors have to recover with the assistance of the executor. In a personal bankruptcy, lasting 5 years after it has been approved by the court, we must carefully pay off our past debts,
How to get a loan with bad credit?
Personal loans for poor credit: our income (from employment, business, capital, etc.) should always be sufficient to cover our commitments. We consider the following:
- Costs of living (of his or her dependents, ie families): rent, energy, telephone, internet, food, clothing, transport, leisure activities
- Loans, mortgages, credit cards, overdrafts
The cost of living is calculated by the bank in a normative way and it is not possible to individualize / lower the arguments “I am so much more neutral”. For one single person in the household without any further liabilities, they start at $ 8-10,000 (if our net monthly income is less than this amount, it is not advisable to apply for a loan).
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If we do not have sufficient income for a new loan, it is often enough to cancel an unused credit card or overdraft. Banks must take into account the approved credit frameworks for these products even though we do not need to use them.
Banks usually count on the average net salary for the last 3 months, confirmed by our employer’s payroll. If we just got added, it’s worth a month or two to wait.
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These social groups are not automatically excluded from the credit market, but they are subject to the same strict scoring rules as for workers.
Personal loans for people with bad credit
Students do not usually have their own regular income from an employment contract of indefinite duration (brigades, DPPs and DPPs can not be recognized). Although some banks offer to students advantageous overdrafts and credit cards without proof of income (with a small personal loans for bad credit very limited credit framework of up to $ 5-20,000), the student can only get a regular loan for a full-time job of indefinite duration or with a parent’s guarantor’s obligation.
Small personal loans for bad credit
Pensions and other permanently claimed social benefits of the bank include in regular monthly income, so most retirees with an average pension (currently $ 11,800) on a small loan with monthly repayments of up to $ 3,000 will reach. However, the rapidly growing number of seniors in execution is alarming.
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With the shortest two-year parental option, the mother who nurses the child has a monthly income of $ 1,500. This is enough to cover the more modest cost of living mother and newborn, but there is no room for possible repayment of loans.
How to get a personal loan with bad credit?
If this is the first unsuccessful request, we can try our luck with another bank (for example, it will have a slightly milder scoring process, but we do not expect great miracles).
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After two or more rejections, further attempts to make sense – Records in registers of unsuccessful attempts would only aggravate their creditworthiness in the eyes of creditors. There are 4 possible solutions:
- Apply for a smaller loan: Perhaps our income on a smaller loan will be sufficient.
- Reduce your expenses: By reducing spending, we will achieve savings from which we can save on the subject of our interest. It will take longer, but we will not have to pay interest again, and our family budget will definitely thank us for spending cuts in the future.
- Wait: If the records in the registers were the main reason for the rejection, we will have to wait 4-5 years from the date of the last violation.
- Increase your income: If our incomes are not sufficient, we can try to look for another job with higher wages.
Whatever the reason for rejecting a loan application, the banks are under no obligation to defend their comments or comment more.
We also recommend our article We lend you responsibly.