Bad Credit Loans

If someone has a low credit score (below 700), acquiring a personal loan may be more difficult, and the loans designed exclusively for these types of individuals are called bad credit loans.

Bad credit loans can be extremely beneficial, especially for those who are in urgent need of funds and have low or no credit history. Learn more about loans for bad credit in this article.

Bad Credit Loans in India

Bad credit loans are loans that are specifically tailored for people who have poor or no credit. Many lenders are afraid to lend to people with low credit scores since they are more likely to default on payments. A low credit score indicates that an individual has a limited repayment capacity, making it difficult for them to find a lender willing to lend to them.

Those with bad credit or no credit can benefit from a bad credit loan. These loans are typically secured, which implies that individuals must offer collateral or security, such as any property, assets such as gold, financial securities, and so on, in order to obtain a loan.

Alternative Loans for Bad Credit

There are several options for loans for bad credit scores:

LAP - Loan Against Property

Individuals who own a property, whether residential, commercial, or industrial, can apply for a LAP. LAP interest rates start at about 7.35% p.a., with loan terms typically ranging from 5 to 15 years. Some lenders, however, offer LAP terms of up to 20 years. The loan amount would be determined by the property's worth and your ability to repay. LAP is especially beneficial to those who require substantial loans that they want to repay over a long period of time.

Gold Loan

In order to obtain a Gold Loan, you must offer gold as collateral to the lender. Because it is a secured loan, lenders normally do not consider the applicant's credit score. Gold Loans are also known for their speedy processing and disbursement, as well as their flexible repayment arrangements. The loan amount is normally up to 75% of the gold value established by the lender, with interest rates starting around 7% p.a.

Top-Up Home Loan

If you have previously taken out a home loan, you can inquire with your home loan provider about a top-up home loan. A top-up loan, unlike a mortgage loan, can be used for any purpose. Top-up house loans will almost certainly have lower interest rates than other credit choices available to home loan borrowers. Those with extended tenures remaining on their house loans will also be able to acquire a longer period to repay their top-up loan. While the aforementioned loan choices are available to those with poor credit, it is critical that you make remedial efforts to improve and grow your credit in order to have a better financial future.

Loans Against a Security

If you have investments in mutual funds, stocks, debentures, and so on, you can take out a loan against your securities. The loan amount and interest rate you are eligible for are determined by the securities you wish to give as collateral to the lender, as well as the LTV ratio, current market conditions, and the lenders' credit risk assessment rules.

Lenders Offering Personal Loans for Bad Credit

If you have a bad credit score - pledging collateral can help you receive a better loan deal. Supplying collateral reduces the risk involved with lending to you, allowing you to negotiate lower interest rates with lenders. Secured loans are those that are made against collateral or security.

If you have a bad CIBIL and want to get a personal loan, you have two alternative possibilities besides banks.

  • P2P: Certain lending websites, known as P2P websites, offer loans of up to Rs. 5 lakhs with terms ranging from 12 months to 60 months to those with bad credit.
  • NBFCs: Many NBFCs will issue you a personal loan despite your low credit score but at a little higher interest rate. When it comes to credit scores, NBFCs are typically more flexible than banks. Some NBFCs have approved loans with credit scores as low as 360.
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