Bad credit lender or sub-prime lender is a lending company that specializes in providing loans to people with bad credit. Under normal circumstances having a bad credit history can really hurt your chances of getting approved for credit. But there are many loan lenders who will lend you money even if you have poor credit.
For short-term small amount of lending these lenders offer loans in the form of payday loans or cash advance loans. If you have a steady source of income you can borrow a cash loan, which you need to pay it back with your next paycheck. And for a long-term large amount of borrowing the lenders provide car loans, mortgages, debt consolidation loans, or even student loans.
How Bad Credit Lenders Look at Your Loan Applications
As you have bad credit your lender will see you as a high risk borrower. Their main concern is whether you will be able to repay the loan or not. If you want your application get approved you have to understand what they want from you. Here is how they look at your application:
1. A sub-prime loan lender checks your credit report and score. They are looking for information on how you have paid your bills in the past and what your credit score is. Based on that information they try to predict whether you will pay your debt in the future and calculate the cost of your loan.
2. The bad credit loan lender also looks at your ability to repay the loan. They want to know whether you can generate enough income to repay your debt from your job history. Even if you secure the loan with collateral such as your house they don’t actually want to get their money back from you through a foreclosure process.
3. For a loan that requires you to give a down payment, such as purchasing a home or a car, the lender usually want a bigger down payment. Their reason for this requirement is the higher your stake in your home or car the more likely you repay the loan.
Search for an Online Bad Credit Lender
There are many lending institutions that deal with people with bad credit. You just need to find them. And here are some tips on how to go about looking for bad credit loans:
Research your lenders. Doing some research will do a lot of good when it comes to looking for bad credit loans with good terms. Just go online through comparison shopping sites and then create a list of reputable lenders. You may also visit forums where members share their experience in getting this kind of loan.
Apply for a bad credit loan. Select up to three legitimate lenders that you are comfortable working with and apply for a bad credit loan with each of them. Also, it is a good idea to build a good relationship with prospective lenders as it can help you soften the deal and give you a better interest rate.
If all your applications get approved, compare the quotations and then choose a bad credit lender that gives the best deal. If you can only get approved for one application then take that loan. Be sure that you make payment on time as this will improve your credit rating. With an improved credit score you can refinance the loan to lower its interest rate or qualify for prime conventional loans.