This post is sponsored by monkeymoney.com.au
Having bad credit can be a killer if you want to get a traditional loan, as most lenders are nervous about lending to people with bad credit. Fortunately, there are bad credit loans that you will be able to apply for instead. Before you head to apply for these loans, you need to know what you have to have to qualify for them.
The Ability to Repay
Getting a bad credit loan does not mean that you do not have to meet certain qualification criteria. One of the most important is that you need to prove that you are able to repay the loan. Traditional lenders will look at your credit score to assess this, but bad credit loans need more information.
You will generally have to prove that you are employed or that you make enough each month to cover the loan repayments if you are self-employed. There are many lenders who will want more information about your debt to income ratio. This will tell the lender if you are paying other debts and if they will have to compete for your money.
Your Career Could Matter
There are some lenders who will also look at your career. These lenders are looking for more stability and will assess if you will be able to repay them if the economy sours. Your career will generally not be the deciding factor in whether or not you qualify for the loan. However, it is something that you could be asked about so it is best to have the information on hand.
Some Collateral
There are bad credit loan providers who will ask for collateral before they provide you with a loan. This will need to be something that has enough value to cover the loan or a percentage of the loan. The most common collateral that is used will be any property that you own.
The lenders want this collateral to limit their risk should you not be able to pay the loan back. If this happens, they will be able to take possession of your collateral and sell it to cover the loan. It is important that you carefully consider what you place as collateral and whether or not you will be able to repay the loan.
Getting A Guarantor
In order to qualify for a bad credit loan, you might have to get a guarantor. A guarantor is generally a close family member who will sign the loan with you and will be liable for loan repayments if you are not able to make them. The guarantor will generally have to be someone who has good credit and must be able to prove that they can repay the loan.
Other Factors
There are other factors that you need to consider when getting a bad credit loan. Most loan companies will not provide bad credit loans to people under the age of 21. You may also need to prove that you are a resident of the area and that you can be easily contacted by the lender.
