A bad credit score or no credit history are roadblocks when availing of a personal loan on favourable terms. Financial institutions do not advance loans for bad credit as a low credit score indicates a higher risk of default in payments. But thankfully, there are a few lenders who work with such borrowers. They tweak the terms and conditions and customize their lending, thus helping people get an urgent loan with bad credit in India. Let’s check out which bank gives personal loans with bad credit in India?
Eligibility Criteria for Bad Credit Loans
- The applicant should be a resident of India.
- They should be at least 18 years of age.
- Some banks require that the applicant should have a minimum income of Rs. 3 lakh per annum.
- In case of businesses, it is required that the said business be in operation for at least 3 years.
- Salaried, non-salaried and self-employed applicants can apply.
- The applicant should have the repayment capacity with regards to the loan amount.
When Does Someone Need Bad Credit Loans?
- The applicant has defaulted on their previous loan payments.
- He or she has defaulted on their credit card payments.
- The applicant has never taken a loan and has no financial track record whatsoever.
- A previous loan application has been rejected based on bad credit ratings.
Features of Bad Credit Loans
- The loan is offered at a reasonable rate of interest.
- The applicant’s credit history is ignored with this loan.
- The loan is processed quickly.
- The length of the contract is negotiable.
- The candidate is qualified for large loans.
Best Bad Credit Loans in India 2021
- Secured Loans
Applying for a secured loan is the easiest way to get personal loans for bad credit. The loan is approved against collateral or security and therefore lowers the lender’s credit risk. This, in turn, helps the borrower avail of a loan at a lower rate of interest and favourable loan terms.
- Unsecured Loans
In case the borrower is unable to pledge any collateral, an unsecured loan can be applied for provided there is a stable income and low debt-income ratio. But the unsecured loan will be approved at a higher rate of interest.
- Loans From NBFC
The Non-Banking Financial Companies are lenient than scheduled banks when it comes to eligibility checks and credit scores. Therefore, the chances of getting loans for bad credit are more with NBFCs. But loans from NBFCs are approved at a higher rate of interest.
- Choose your Existing Banker
In case your credit score is low because of your no credit history, you can apply for an urgent loan for bad credit with your existing banker. Customers who are eligible for a personal loan, have a good relationship with the bank, and have a healthy financial track record will be approved for an urgent loan for bad credit by their existing bank.
- Apply for Current Account Overdraft
If you are a self-employed individual and have a current account in the bank, you can avail of an overdraft facility to meet the urgent financial shortfalls.
- Digital Lenders
Apart from banks and NBFCs, digital lenders also advance credit. These lenders operate through mobile apps. They do not have stringent eligibility checks. They advance short-term loans for bad credit without much hassle.
How to Get a Personal Loan with Low CIBIL Score
1. Look Out for a Reliable NBFC
If your score is poor then you need not to worry as there are a plethora of NBFCs available which are ready to offer you this unsecured credit facility. Yes, these Non-Banking Financial Companies offer a loan to such applicants but usually at a higher interest rate. Well, which ultimately means your loan repayment burden will increase but on the other side, your varied needs can be fulfilled as you can get the loan.
2. Add a Co-applicant
Your bad credit score doesn’t stop you from availing a personal loan as you can apply for this credit facility by involving a co-applicant. If a co-applicant is having a good score, there are higher chances that you can get this loan. Of course, you will need to ask the other applicant beforehand for a complete KYC process. In fact, you also need to cross check the same with your lender, whether your lender agrees to the same clause or not. Generally, many lenders agree to the same but it is advisable to double check the same.
3. Request Your Existing Lender
If you have been a reliable customer, someone who has maintained the fruitful terms with the bank, you can raise a request to avail a personal loan. Even though your score is bad but generally banks don’t want to lose their existing customers so requesting for the same might work in your favour. There are higher chances that you can get the loan at higher interest rates or there are some other conditions that your bank will put in front of you but there is no harm in trying.
4. Show that Your Income is good enough for Repayment
If an individual is earning a good income or he/she is having an additional source of income, a lender may consider your application for a personal loan even with a low score. With a good income, you can easily manage to repay your loan in the future, which of course, many lenders lookout in an applicant before offering the loan. Apart from a steady income, if you have a stable job, lenders are more likely to grant you a personal loan despite a poor CIBIL score.
5. Go for a Secured Personal Loan
Generally, personal loans are unsecured but there are many lenders that offer secured loans also. Yes, while availing the secured personal loan, you need to give a collateral/security to the bank and because of the same; there are chances that a lender can give away the loan to you even if your score is bad.
Where to get Loans for Low CIBIL Score?
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