How & Where can I get a Loan with Bad Credit?
As a result of the current inflation, most people are financially strapped and have a limited amount of money to spend in a month. In such circumstances, borrowing or taking a instant cash loans is something every person who is short of funds requires in life. South Africa, being one of the developed nations globally, provides various loan services to its people.
Now the question is, majority of the banks provide loans to people with a good credit score. Consequently, individuals with poor credit scores have a minimal likelihood of accessing a loan from commercial banks. This leads to the following question, which credit lender can an individual with a bad credit score access?
If you have a bad credit history and want a loan from any department or bank in South Africa, the following article is all you need.
What’s a Bad Credit?
Now, let us discuss bad credit before going deep into the loans with regards to it. If you are new to borrowing and banking, you may not be clear on what bad credit means. Do not worry, I will assist you in gaining more knowledge and clear your confusion if any.
When an individual person opens up a bank account, he has two types of credits. This implies that he has a good credit history in the sense that his bills are well-paid. The other side is bad credit, and this implies that an individual has a habit of failing to pay his dues on time.
A borrower with poor credit status will have a poor credit rating, which determines the loan size. A lot of people are on the verge of their blacklisting if they have a poor credit history. Therefore, most of the banks provide credit facilities to individuals who have a good credit status. Now, the question that arises is, who is willing to lend me money with bad credit in South Africa?
How To Get A Loan With Bad Credit History?
Check Credit
When I was new at taking loans, I thought there is no such thing as a credit history and that everyone can apply for a loan, but I was wrong. Most lenders have a limit on credit history.
In other words, if your credit score falls from the minimum limit, you might face difficulty in getting a loan. Therefore, you must check your credit history before applying for a personal loan south Africa.
Numerous financial companies offer services to help you check your credit score for the loan application. You can check your credit score, find errors, and fix the errors to increase your credit score.
Lenders’ Comparison
One of the most significant factors to consider when applying for a loan with bad credit is the lenders’ comparison. Let’s suppose two lenders have offered you the same loan amount you require.
Now, you have to choose the best one between both. How do you choose the most suitable lender? Well, the best thing one can do is compare the lenders and the facilities they offer.
First, you have to look for the best bad credit lender that offers an affordable rate, a fast funding system, and an online source to manage loans. In short, lenders’ comparison plays a vital role in the loan application with a loans for bad credit history.
Pre-qualification
Another prominent factor to consider when applying for a loan application includes pre-qualification. A pre-qualification system allows you to check loan amounts and repayment terms and conditions.
Remember, this procedure does not affect your credit score. Additionally, this process is ideal for individuals who want to check if they qualify for a certain loan. You can also use this procedure to compare lenders’ offers.
Application
Once you choose a lender, you should gather all documents and apply for the loan. Some of the most essential documents required for a loan application with bad credit include financial statements, pay stubs, and social security numbers.
Where To Get A Loan With A Bad Credit?
Loan with a bad credit check can be a big issue for a client, but if you are a South African citizen, the following details can help. Many online lending companies operate in South Africa, including those specializing in providing loans to clients with bad credit records.
Apart from online loan services, there are many others who opt for loans in their specific needs referred to as tailor-made loans.
They can be described as subprime credit loans, making them suitable for those with a damaged credit score. There are certain requirements that one has to meet to get a tailor-made loan and this includes proving that they have been responsible in repaying the loan on time. In this case, you can include some additional security that the lender can repossess in the event of no refund.
When it comes to getting a loan with bad credit, those wishing to turn to the traditional banks will find that they need not bother because most of the traditional banks do not encourage anyone with a bad credit history to apply for a loan. In such circumstances bad credit lenders are ideal since they accept any credit score from their borrowers.
One can search for an online loan company dealing with people with bad credit and submit an application for the loan. In this case, I recommend searching for more than one lender to secure better rates of interest. In summary, one of the factors when considering taking a loan is to select a licensed lending company in case something wrong happens in the future.
In other words, you should choose a lender who follows the rules and regulations set by NCA. Though you can have multiple lender options, you must choose only one lender to get a loan because lending money from more than one person adversely affects your credit history.
One of the factors you must remember when applying for a loan with bad credit is that online lenders cost you more money and have an interest rate that is higher than that of traditional banks.
Credit Unions
If you have a low credit score and the kind of loan you want is available with your credit union, then your problem is already solved. Credit unions serve as one of the best options for obtaining a loan for a person with a bad credit history.
It is clear that the only condition necessary for obtaining a credit is membership in the credit union. If an individual has a really good relationship with his credit union, he can be issued a loan by the credit union.
In stressing the benefits of borrowing money from credit unions, one of the most important aspects is that their annual percentage for the rates is 18%. On the other hand, online lenders have a capped rate percentage of up to 36 %, depending on the laws of the country.
Online Lenders
As I stated earlier, traditional banks do not offer loans to people with bad credit. In such situations, online lenders are the best source for loans.
You can find numerous online bad credit lenders. All you need to do is find some authentic and registered online lenders and check their rules and regulations. Again, you should compare some online lenders to check which one suits you the most.
When looking for online lenders, you might come across people who don’t check your credit history and offer you a loan. You must avoid such online lenders. Though they don’t check your credit score, they have a high interest rate compared to others.
Government’s Role To Help People With A Bad Credit
Unfortunately, people with bad credit cannot apply for a loan from ordinary banks; however, the government of South Africa regulates various agencies and companies that provide loans to individuals with a bad credit rating. Many of the loans provided by these companies are payday loans, which are due to be paid once the borrower receives the next paycheck. In other words, you can get a cash advance from these sources for urgent needs.
P2P Loans
Another prominent method to get a loan with bad credit is through peer-to-peer lending. It is a platform that enables people to borrow money from a private person. In such a platform, no
credit history or bank details are required.
It is one of the best ways to borrow money because every person has different financial criteria. The only thing you must be concerned about is that you should sign a repayment contract with the lender to avoid inconvenience and improve your credit history.
Secured Loans
If you have a bad credit history and want a loan, secured loans are one of the best options for people who can add collateral to secure their loan. For those who don’t know, collateral acts as your security. In case of no repayment, the lender will cut your money from your collateral.
FAQs
How to get a loan with really poor credit?
You can get a loan with a poor credit score from different sources. If you are a member of a credit union, you can borrow money from a credit union without worrying about your credit score.
What is a bad credit score?
A bad credit score means a person needs to pay his bills, etc on time. Such people can’t get a loan from traditional banks.
Where do I get a loan from with a bad credit history?
Apart from credit unions, you can choose an authentic online lender with a low interest rate to borrow money. Furthermore, you can also borrow money from government agen or companies for emergencies.
The above article is helpful for people who want to borrow money and have bad credit. You can get a loan from a credit union with a bad credit score, but you must be its member.
Moreover, online lenders are the best option to get a loan, but their interest rate is more than traditional banks. You can also borrow money from a private person through the P2P platform.
