Loans For Bad Credit Direct Lenders
Most Americans work hard to earn an income and to meet their financial needs. However, emergencies do happen. You may need immediate cash for car repair, a medical emergency, or travel expenses. The reality is that most people don’t have the comfort of a savings account. In fact, statistics show that 60% of Americans have less than $500 in savings. In addition, a large portion of the population has below than average credit.
While those with stellar credit scores may have access to credit cards and bank loans, others may not be so lucky. If you have bad credit, you may feel left out of the financial system. Luckily, loans for bad credit direct lenders fill the gap between those who have low credit scores but need immediate financial help.
Loans for bad credit are secured or unsecured loans that are available for persons with poor credit ratings. Rather than relying on one’s credit score, they are based on your income and the amount of time you will take to repay. By finding the right lender for bad credit loans, you can receive the amount you need in a timely fashion.
What are bad credit loans?
A bad credit loan is a type of loan that’s available to persons with less than perfect credit. Rather than using your credit score as a basis for qualification, bad credit loans are issued based on your income. The amount of your monthly income typically determines how much you can qualify for and how much time you will have to repay the loan. These loans can be issued as a one-time loan or as an installment loan. Bad credit installment loans direct lenders give you more time to repay the initial loan amount (plus interest) over the course of several months.
In general, finding the right lender will be key to a bad credit loan. There are many different credit unions, online lenders, and other financial institutions that provide bad credit loans. By working with the right lender, you can access the amount you need at an affordable interest rate. In particular, most online lenders for bad credit loans give you access to your cash in less than 24hours.
Bonsai Finance connects borrowers with many different online lenders. We maintain an extensive database that allows you to compare offers from multiple lenders at once. And because we do the legwork of ensuring that each direct lender is certified and genuine, you can apply for the money you need in no time.
The working principle
Many people wonder how a bad credit loan actually works. There is a lot of confusion that surrounds this option, particularly because many people think that they can’t access a loan if they have poor (or no) credit. Bad credit loans give borrowers access to much needed funds for many different purposes. They come in handy for emergencies such as car repairs or when you’re looking to slowly improve your credit score over time.
The main basis of a bad credit loan is having a steady and reliable income. Remember that having bad credit means that you have a history of not paying your bills on time (or missing payments on your previous debt). That is why traditional lenders may not offer you regular loans, as they often view people with bad credit as more of a lending risk.
However, the reality of life is that not all people can control their credit fate. You may have faced a large financial burden that caused you to default on your credit. For example, losing your job or falling ill may have caused you to fall behind on utility bills or to miss credit card payments.
Bad credit loan lenders are able to circumvent this challenge by using your income. If the lender can verify that you have a regular source of income, the level of risk associated with your loan is reduced. In some cases, bad credit loans may only be secured by a signed contract. This means that if you default in paying, the loan lender will initiate collection proceedings against you. This is particularly the case with many personal loans, credit card loans, and student loans.
Why you may need a loan for bad credit
You may be wondering who needs a bad credit loan, and how such loans can be of benefit to borrowers. Bad credit loans come in handy for many different situations.
While emergency expenses are perhaps the most common reason why borrowers get bad credit loans, you may also obtain such a loan for the following reasons.
When you need cash in a timely fashion
As opposed to traditional loans that may take some time to process, bad credit loans are typically more convenient to work with. In fact, many online lenders can deposit the money into your bank account within one business day.
In most cases, bad credit loans are of amounts between $500-$2000. They are perfect for short-term expenses that would otherwise throw you off budget. If you have bad credit and you need access to quick cash, bad credit loans can get you out of the woods.
Building your credit history
Did you know that you could use bad credit loans to re-build your credit history? In particular, installment loans for bad credit direct lenders can serve as a launch pad to financial independence moving forward. When you pay your installment loans on time, each timely payment counts positively to your credit history. This positive reporting can help you access more traditional loan options in the future.
Consolidating and clearing debt
If you have a previous loan (or credit card debt) that is giving you sleepless nights, a bad credit loan can help. Bad credit loans can be used to clear off a high-interest loan or a credit card balance that’s further affecting your credit score. And because bad credit loans don’t require stellar credit scores, you can qualify for the cash you need and receive it in a short amount of time.
Carrying out home repairs
Do you need to make upgrades to your home while having bad credit? No need to worry, bad credit loans are a useful option to consider. They come in handy especially when you’re looking to make repairs before selling your home.
Moving to a new location
We all know that moving is expensive. If you’re planning a move to a new city or state, you will often face many different last minute expenses. A bad credit loan is an excellent way of giving yourself a cushion from such expenses. It also gives you a fresh start and a new financial plan moving forward.
How bad credit installment loans direct lenders deal with risk
As useful as bad credit loans are, direct lenders for these loans still need to deal with high levels of risk. In most cases, people with bad credit may have a history of defaulting on a loan, credit card payment, or utility payment. So how can these direct lenders ensure that you will pay back the loan after borrowing?
First off, they ensure that you have a verifiable and stable income. As opposed to payday loans, bad credit loans give you more flexibility during repayment. Depending on your direct lender, you can repay the amount in installments. This means that the loan is more manageable and you’re less likely to default.
Direct lenders for bad credit loans also deal with your application directly. This means that they can evaluate your income and other eligibility criteria to determine if you’re the right candidate for a loan.
How to find installment loans for bad credit direct lenders
When looking for a bad credit loan, the lender you work with will play an important role in the entire process. Direct lenders review your application, determine how much you qualify for, and set the repayment terms for your loan. You should keep in mind that not all direct lenders are the same. Some may charge unreasonably high interest rates to take advantage of borrowers who need cash for emergencies. Others may also require payment in an unreasonably short amount of time.
To find a quality direct lender for bad credit loans, look out for the following criteria.
1. Flexible repayment terms
The most important criterion for any loan is one’s ability to repay. If you don’t have enough time to repay the loan, you’re highly likely to experience trouble down the line.
Make sure your direct lender gives you enough time to repay a bad credit loan. They should maintain flexible repayment terms that fall in sync with your paydays. Most lenders allow you to use more than one paycheck to repay a bad credit loan.
2. A loan amount that is relevant to your income
Because your ability to repay a bad credit loan will depend on your income, make sure you work with a lender who takes into consideration how much you earn. Direct lenders may also closely evaluate your bank statements to determine if you can comfortably repay the amount you borrow.
3. Ability to rebuild your credit
For installment loans, make sure your direct lender reports timely payments to the relevant credit bureaus. By showing that you’ve successfully repaid several loans in a timely manner, your credit score will slowly improve over time and you’ll be able to access more financial resources.
4. Licensed and certified
When applying for a bad credit loan, it’s also important to carry out due diligence. Make sure your direct lender is licensed for business and certified by relevant governing bodies. This will help you avoid disclosing your personal and sensitive information to untrusted loan lenders.
With Bonsai Finance, applying for a bad credit loan is safe, secure, and reliable. As a financial services company, we connect you with a network of online loan lenders who offer competitive loans for bad credit. When you apply through us, we give you access to licensed and verified lenders who have your best interests at heart.
Understanding the application process
Applying for a bad credit loan has been made easier, thanks to technology. You can now fill in a brief application online and receive a decision in minutes. Most direct lenders provide a secure online platform for you to fill out an application for the loan amount you need. For most bad credit loans, you’ll need to meet the following criteria.
- Age between 18-65 years
- Have a U.S bank account
- Have a verifiable source of income
- Live in the United States
- A working phone number that can receive voice and text
There may be additional requirements depending on the direct lender you’re working with. However, the 5 criteria above tend to be the basic ones for eligibility. You may also need to sign a contract that specifies the loan amount, terms of repayment, and what happens in case of defaulting (which is most often collections or renegotiation of the loan).
How Bonsai Finance can help with bad credit loans
Loans for bad credit direct lenders are excellent options for people with poor or no credit history. They come in handy for financial emergencies, meeting temporary shortfalls in your budget, or repairing your credit over time. While there are many different direct lenders for bad credit loans, it can be challenging finding the right one for your financial situation.
That is why Bonsai Finance provides such a useful service to customers. By simply filling out one application, we connect you to our network of hundreds of online lenders. But instead of giving you a long list that will take time to navigate, we single out the top few lenders who best meet your application criteria (regardless of credit score). This makes it easier for you to identify a lender best suited for your financial situation.