For lenders, personal loans with bad credit are more than just business ventures because they are also a means to help you. Remember that the no credit check requirement makes personal loans with bad credit a very risky business. There is no collateral or anything that the lenders would have in their possession to serve a material assurance of your promise to pay. In fact, lenders face a default rate of 10-20%. Recent survey even has it that the cost of default personal loans with bad credit take up a quarter of your lender’s annual revenue.
How do Lenders of Personal Loans with Bad Credit Protect Themselves?
Lenders protect themselves in two ways: they charge higher-than-usual interest rates and they verify your employment status.
It is no secret that the interest rates of personal loans with bad credit are higher than the ones offered by your local banks. However, some reports you hear may have been exaggerated because personal loans with bad credit do not qualify for Annual Percentage Rates. These loans only go for 30 days before the contract is either closed or renewed.
Lenders do not hide this fact from you. Yes, they are required by law to be 100% transparent but that requirement was only passed recently. Notice that your most trusted lender may have already been transparent to you ever since and that’s because they have a reputation to keep too.
On the other hand, your employment is your ticket to getting your application for personal loans with bad credit approved. But to make sure that you are really financially capable of paying back the amount that you’ve requested, lenders call your employer to verify. They would also take a look at your paycheck and then calculate the 20% that you can only borrow. All these happen within the next 24-48 hours from the time that you submitted your application online.
How do Lenders Protect You?
But aside from protecting their business, lenders should also protect you as a borrower. To help you avoid more financial troubles later, the best lenders extend extra services to explain to you the pros and cons of personal loans with bad credit.
They should also protect your personal and financial information by requesting that all documents be emailed, not faxed. All exchanges pertinent to your application for personal loans with bad credit are also done via secured servers, with layers of encryptions. These make it extremely difficult for thieves to steal your information.
Lenders not only look after their business but after you too. You are their business and it is important that they treat you well before, during and after your personal loans with bad credit transaction.