The way that lenders think can be summarized in two simple words: risk mitigation. In other words, every lender on the planet who cares about getting their money back (and that is 99.9% of them) carefully weighs the interest rate they charge against the chances that the loan will actually be repaid.
There are several factors that lenders look for in order to make a potential loan deal less risky in the eyes of a lender. These factors include:
- the amount of the loan
- the borrower’s credit score
- whether the loan is secured (i.e.., has collateral associated with it) or unsecured
One of the notions that many people have heard of is that of a 100 percent guaranteed loan, such as a bad credit personal loan. The idea of a guaranteed loan is a wonderful one, indeed: especially in the eyes of somebody who desperately needs the money fast. However, there are some myths floating around about these types of loans.
Here are 5 common myths about 100 percent guaranteed bad credit personal loans:
Myth #1. Everybody is guaranteed to qualify for a personal loan:
There is no law that says that any given lender must grant any given borrower a loan. In that sense, there is no such thing as a 100 percent guaranteed personal loan. However, if you know how and where to look, you have an excellent chance of qualifying for a loan – no matter what your credit score may be.
Myth #2. If you have bad credit there is nothing you can do to get approved:
Some personal loan lenders actually specialize in working with borrowers who have a bad credit score. These lenders have unique ways of determining their risk in lending money to a particular person – ways that go well beyond just looking at the person’s credit score.
Myth# 3. Having a bad credit score automatically means paying extremely high interest rates on a loan:
It is true that most lenders will adjust the interest rate they charge a borrower based in part upon that person’s credit score (see the above notes regarding risk mitigation). Still, bad credit personal loans do not have to come with high interest rates. This is especially true if you are able to put up some collateral on the loan, such as an item of value or a future paycheck.
Myth #4. You are better off only applying with a single personal loan lender:
Most people who need money do something mysteriously illogical: they only apply to a single personal loan lender. Then, if they get rejected, they just give up. Bad idea! Instead, apply to at least 4-5 lenders. This is the best way to improve your chances of qualifying for a loan.
Myth #5. You cannot borrow very much money if you have bad credit:
Just because you have a poor credit score does not mean that you will not be able to qualify for a good-size loan: people with bad credit have been known to borrow $2,500, $5,000, $10,000 or more in the form of a personal loan.
Consider these 5 myths about 100 percent guaranteed bad credit personal loans, then get to work applying for the loan you need.