Having bad credit is not favourable for anyone who wants a loan. Lenders, such as mainstream banks and financial institutions shy away from approving loans for applicants with bad credit. Borrowers with a bad credit score are considered high risk. The probability of them defaulting is higher than those with good credit scores. For anyone to have a good credit score, they must have repaid the loans in time and keep with the terms and conditions of the lender.
That being said, it is still possible to secure an urgent loan with bad credit in India, as some financial institutions work with those who have bad credit. These are –
Non-banking institutions – As compared to banks, these institutions are more flexible and lenient when it comes to credit scores. Most lenders under this category will approve your loans without insisting on a good credit score. The drawback of these loans is that they are expensive and often have a higher interest rate.
Digital lenders – This is another option for seeking an urgent loan with bad credit in India. They do not have strict requirements compared to banking institutions. Digital lenders have online applications to check eligibility and grant loans. Most of the loans are short-term and come in handy during a financial contingency.
Who qualifies for a loan with bad credit in India?
To qualify for a loan with bad credit or a personal loan without CIBIL score in India, you have to be an Indian citizen who is 18 years and above in age. You can either be employed or self-employed. The key point is whether you can repay the loan within the stipulated time.
What you can do to secure an urgent loan with a bad credit
Know your financial ability – The first thing you need to do is assess your financial capacity. Ask yourself if you will be able to repay the loan you are seeking on time. Late payments may cost you more, and defaulting will give you a bad score. Find more about Bajaj Finserv EMI overdue charges online.
Check whether you are eligible or not – There are criteria that you must fulfil before securing an urgent loan with bad credit in India. Check the requirements online or with the lender you intend to borrow from before applying. The requirements are different for different companies, and some have more requirements than others.
Consider secured loans – This is one of the ways to get an urgent loan with bad credit. Here, you must provide collateral as security before availing of the loan. If you have a property like a building, land, or logbook, you can easily get a loan from most lenders even if you have a bad credit score. Professional valuers assess the collateral and then decide on the amount of loan you qualify for.
The amount given for secured loans depends on the value of the collateral. It is always lower than the value. You should use collateral only when you are sure of repaying the loan on time; otherwise, you will lose your collateral to the lenders.
Show proofs of income – Financial institutions or even digital lenders are looking for your ability to repay the loan within the pre-determined time frame. If you are employed, you may need to provide your latest payslips as proof of income. For business people, a bank statement could serve the purpose.
Look for a guarantor – It is not easy to convince people to stand in for you when you already have a bad credit score, but it is another way to secure a bad credit loan. The guarantor must be a person with a good credit score and should also be willing to fill out your loan form, including their signatures.
The guarantor, in most cases, is a person who knows you well. By agreeing to be your loan guarantor, they convince the lenders that they are ready to bear the burden in case of nonpayment.
Opt for your current banker/NBFC – Your current banker or NBFC can be a good option for securing an urgent loan with bad credit. This only works when you have a good relationship with the lender and your bad credit is because you have never availed of a loan before. If your CIBIL score is NA/NH, where NA stands for not applicable and NH stands for no history, your loan officer will be able to check your bank statement and tell you the loan amount that you qualify for.
Final words
It is important to note that an urgent loan with bad credit in India or a personal loan without CIBIL has a high-interest rate and is primarily short-term. In the case of secured loans, one may lose the collateral when the loan is not repaid on time. Although getting an instant loan for low CIBIL score is not easy, it is possible. You will need to prove to the lender that you will be able to repay the money.