What are the circumstances in which the bad credit is created. Let us try to understand this first. As we all know that there are different needs of a person. These may be personal or financial or other related needs. Many a times a person could not get these needs fulfilled because of shortage of funds. Thus, it can be said that the money is required to fulfill all the financial and some of the personal needs of a person. This makes him frustrated and this frustration can only be removed when the needs get fulfilled, i.e. a person gets the required money. This forces him to borrow money from various financial institutions and other lending institutions. It is needless to say that all this money borrowed constitutes loan portfolio of a person. But this loan taken has to be paid back also, as per the terms and conditions agreed by the borrower and the creditor.
Now the question that arises here is Is it necessary that a person would be able to repay the loan taken as per the terms and conditions agreed The answer to the above in many cases is no. Because it has been observed that about 10-15% of the persons that take loans are not able to repay as per the different terms and conditions. The reason for this non-repayment can be the are non-availability of funds due to many reasons, illness of the borrower, some exigency at the home of the borrower etc. Or it may also be intention of the borrower not to repay the loan taken. Whatever is the reason, if the loan is not paid back, it becomes bad credit for the financial institution that had provided the loan. So, the non-repayment of the loan borrowed constitutes bad credit. This bad credit is quite harmful to the credit rating of a person
What is to be done next:
The next question that arises here is that if a person, in whose favor a bad debt has been created, wants some money to fulfill his needs, what should he do It is not easy to get another loan from the various finance institutions owing to the bad credit. Does it mean that a person can never get a loan till his credit rating does not improve No, it is not like that. Even if a person has a bad credit created, he can get the loan. This is possible by means of refinance. Refinance is the act by which a person gets a loan from another lending institution for paying off the loan availed from the earlier lending institution. Once a bad credit has been created, the refinance is possible only when a person provides some security against the loan to be taken. We shall discuss this all next.
Taking a refinance loan after the bad credit has bee created:
After a bad debt has been created, it really becomes very difficult for a person to get a loan. It has been seen in many cases that the lending institutions straight way rejects the loan application of a borrower. If a person is ready to pay a higher rate of interest, he would definitely find an institution that would provide him a loan and this loan is known as refinance. Though they make use of the necessity of a person, but in many cases, the person has no choice but to take the loan. Since the number of institutions that provides loan to a person in whose favor a bad credit has been created, are not so many, it also enables such companies to provide the loans at exorbitant rates. All the above discussion is with reference to the condition where a borrower fails to provide any security for the loan. But if a person provides some security like his home or any other land or even his new car, the chances of getting a loan becomes much brighter. The most common form of security is the mortgage of property. Also, finding such institutions that provides loan by mortgaging the property of a person are many and thus, the rate of interest that is charged by the lending institution gets lower. Thus, it is advised here that if a person has any property that can be mortgaged, getting the loan becomes easier.
If a person has decided to go for the refinance, the next step that has to be followed is to find a financial institution that provides the bad credit loans. The search of the person should not be restricted to his bankers and other ones in the nearby homes but all the refinance institutions in the city and the various lenders, especially the online lenders should be contacted so as to get the best lender. Before taking any decision about the best refinancing institution, the following should be considered:
1-What is the rate of interest that would be applied The rate of interest should be clearly asked for. If no clear reply is coming from the lending institution, it should be taken in writing. This is because such bad credit loan lenders promise to offer a low rate of interest and in many cases, it does not happen because they know that the options in front of a person are limited. Also, at the time of closing the loan, such institutions charge high interest rates in the account. So, it becomes even more important to fix the exact rate of interest.
2-Is there any prepayment penalty As we all know, there is some penalty if a person repays the loan before the tenure is completed. This should be asked clearly for. It should be properly understood that if the lender asks for the penalty in case the loan is repaid in the first six months, then it is perfectly ok. But if the lending institution insists on the prepayment penalty even if the loan is paid after one year or more, then it can be said that such lender is not the right one and should be avoided.
3-Is there are any hidden charges. All the charges that are applied in the loan account should be asked specifically and it should be noted in writing also.
It is a common practice that if the lending institution is pushing very hard to a person to take the bad credit loan, a person should become cautious of each step taken by the lending institution.
Thus, one should be very cautious in taking a loan from a bad credit loan lender.
So, refinancing with bad credit is there:
After going through the above article, it can be easily said that there are many institutions that provides refinance to a person once the bad debt has been created in his favor. But a person should take due care about the aspects discussed above.
Now the question that arises here is Is it necessary that a person would be able to repay the loan taken as per the terms and conditions agreed The answer to the above in many cases is no. Because it has been observed that about 10-15% of the persons that take loans are not able to repay as per the different terms and conditions. The reason for this non-repayment can be the are non-availability of funds due to many reasons, illness of the borrower, some exigency at the home of the borrower etc. Or it may also be intention of the borrower not to repay the loan taken. Whatever is the reason, if the loan is not paid back, it becomes bad credit for the financial institution that had provided the loan. So, the non-repayment of the loan borrowed constitutes bad credit. This bad credit is quite harmful to the credit rating of a person
What is to be done next:
The next question that arises here is that if a person, in whose favor a bad debt has been created, wants some money to fulfill his needs, what should he do It is not easy to get another loan from the various finance institutions owing to the bad credit. Does it mean that a person can never get a loan till his credit rating does not improve No, it is not like that. Even if a person has a bad credit created, he can get the loan. This is possible by means of refinance. Refinance is the act by which a person gets a loan from another lending institution for paying off the loan availed from the earlier lending institution. Once a bad credit has been created, the refinance is possible only when a person provides some security against the loan to be taken. We shall discuss this all next.
Taking a refinance loan after the bad credit has bee created:
After a bad debt has been created, it really becomes very difficult for a person to get a loan. It has been seen in many cases that the lending institutions straight way rejects the loan application of a borrower. If a person is ready to pay a higher rate of interest, he would definitely find an institution that would provide him a loan and this loan is known as refinance. Though they make use of the necessity of a person, but in many cases, the person has no choice but to take the loan. Since the number of institutions that provides loan to a person in whose favor a bad credit has been created, are not so many, it also enables such companies to provide the loans at exorbitant rates. All the above discussion is with reference to the condition where a borrower fails to provide any security for the loan. But if a person provides some security like his home or any other land or even his new car, the chances of getting a loan becomes much brighter. The most common form of security is the mortgage of property. Also, finding such institutions that provides loan by mortgaging the property of a person are many and thus, the rate of interest that is charged by the lending institution gets lower. Thus, it is advised here that if a person has any property that can be mortgaged, getting the loan becomes easier.
If a person has decided to go for the refinance, the next step that has to be followed is to find a financial institution that provides the bad credit loans. The search of the person should not be restricted to his bankers and other ones in the nearby homes but all the refinance institutions in the city and the various lenders, especially the online lenders should be contacted so as to get the best lender. Before taking any decision about the best refinancing institution, the following should be considered:
1-What is the rate of interest that would be applied The rate of interest should be clearly asked for. If no clear reply is coming from the lending institution, it should be taken in writing. This is because such bad credit loan lenders promise to offer a low rate of interest and in many cases, it does not happen because they know that the options in front of a person are limited. Also, at the time of closing the loan, such institutions charge high interest rates in the account. So, it becomes even more important to fix the exact rate of interest.
2-Is there any prepayment penalty As we all know, there is some penalty if a person repays the loan before the tenure is completed. This should be asked clearly for. It should be properly understood that if the lender asks for the penalty in case the loan is repaid in the first six months, then it is perfectly ok. But if the lending institution insists on the prepayment penalty even if the loan is paid after one year or more, then it can be said that such lender is not the right one and should be avoided.
3-Is there are any hidden charges. All the charges that are applied in the loan account should be asked specifically and it should be noted in writing also.
It is a common practice that if the lending institution is pushing very hard to a person to take the bad credit loan, a person should become cautious of each step taken by the lending institution.
Thus, one should be very cautious in taking a loan from a bad credit loan lender.
So, refinancing with bad credit is there:
After going through the above article, it can be easily said that there are many institutions that provides refinance to a person once the bad debt has been created in his favor. But a person should take due care about the aspects discussed above.
