Any person can fall into a bad financial phase. As a consequence very bad credit is labeled against the borrower. Some borrowers, who under unavoidable circumstances had to face prolonged adverse financial circumstances, are labeled very bad credit. This means the borrower is a high risk factor for the lenders and a loan becomes all the more a tough task. But the solution also comes along the problem. Very bad credit personal loans are made especially for such borrowers so that they get a smoothly processed finance.
Very bad credit personal loans can be utilized for any personal purpose like making home improvements, financing a vehicle, meeting medical and educational expenses or enjoying a holiday trip.
A borrower is labeled as very bad credit when there are more and more cases of payment defaults, arrears and CCJs against him. This is reflected in his credit report and hence in credit score. On FICO credit score range of 300 to 850, while a score of 580 is bad credit, a score way below than this is considered as very bad credit and therefore highly risky for a loan offer.
For minimizing the risks, lenders provide secured very bad credit personal loans to these borrowers. The loan is secured against the borrower’s property like home and automobile placed as collateral. In case a payment default happens again, the loan is still recoverable on selling the property. With the risks cut to minimum, lenders can offer greater loan at lower interest rate for larger repayment duration ranging from 5 to 25 years. So, very bad credit does not come in the way of availing very bad credit personal loans.
However unsecured very bad credit personal loans are major concerns to the lenders. The unsecured option comes without any collateral. So the risks for the lenders are manifolds. The unsecured loan therefore solely depends on to what extent the lender is convinced about safe return of the loan. So the applicant should prove that he gets a sufficient annual income and has been employed for considerable period. Make a repayment plan that shows that even after paying for previous loans you have enough amount left for timely pay off of very bad credit personal loan installments. Very bad credit personal loans however comes at higher interest rate with amount offered being smaller for a shorter repayment duration.
Make an extensive comparison of different very bad credit personal loans providers and see who has lower interest rate and easier terms-conditions on offer. Apply online to the lender so that the loan is in your account in time. Certainly very bad credit personal loans make it possible for high risk borrowers that they too can avail finance in a hurdle free manner. Make sure to pay off installments regularly so that a credit repair can be done.