There has been a long debate over the efficiency of traditional lending institutions or modern-day online direct lenders. Many loan experts are still in favour of mainstream lenders, considering their proven records and considerable presence all over the loan marketplace.
On the other hand, the trends are more in favour of direct lenders. What are the reasons, then? The primary thing is that these loan providers have come up as the perfect alternative to traditional lending. If you cannot approach the latter one, then you can opt for online lending.
Will that mean mainstream lenders remain with no significance? The answer is NO. They still have preferences in the market, and no one can deny this. Still, alternative lending has provided two significant benefits, i.e. Instant and Affordable Lending.
Instant lending is what is called when an applicant applies for a loan online and receives the acceptance on the same day. Moreover, the person will get the advantage of same-day funding.
Affordable lending describes a process where the lender provides only that loan amount, which can be repayable for the borrower. It means you get the amount that you can meet the expense of while paying back.
Is there any perfect example of it? Yes, we have. We are talking about direct lenders’ bad credit loans.
Now, let us discuss the specialities of these loans. First, we will discuss what such loans are all about.
What are direct lender bad credit loans?
These are the particular types of personal loans applicable for those individuals who have their credit scores on the poor side. It means they are the people with bad credit. Direct lenders prepare special loans for them so that they can also avail of a loan.
As far as the features are concerned, these loans are short-term loans. You will get a small amount to borrow and for a shorter duration. The reason is obvious, i.e. your poor credit record.
The interest rates will be higher, but the approval chances will also be higher. Still, you get the leverage on the repayment part, where direct lenders show their flexible lending norms. You will choose your own repayment term to pay back the borrowed amount easily.
Specialities of direct lender bad credit loans
There are many special attributes of these small loans, which favour a huge population in the UK carrying poor credit scores. Let us start our discussion on them.
- Guaranteed Approval
Unlike mainstream lenders, you can expect direct lender bad credit loans on guaranteed approval. It can be practical due to the affordable lending. The lender will ask you first: how will you pay monthly loan instalments?
You have to answer it by showing the capacity of your monthly income. If the lender is convinced of it, you will definitely get loan approval.
However, if you tend to ask for a higher amount despite a poor credit score, then your lender may not assign you a loan. It is because you will regret it later and may find it difficult to repay the borrowed sum.
- Minimum documentation
Direct lenders are preferable due to their online lending. The most significant part is that submission of many documents is not needed. Your online loan provider will not make it mandatory to share your credit report. However, if you have an updated credit report, you can share it with the lender.
To get the loan acceptance, you can only share proof of identity and residency in the UK, as well as proof of income for the last 6 months. You can mail these documents along with your online loan application. The lender will quickly analyse them and grant you the loan approval on the same day.
- Relaxation on loan collateral
As we have mentioned above, direct lender bad credit loans are short-term loans. Therefore, you do not need to place any personal assets to secure the loan. It clarifies that these loans are away from any risk. You will not lose your assets if you miss the repayments.
Despite the higher interest rates, these loans are useful in having urgent funding, especially during a financial emergency. However, you need to earn a stable income to convince the lender of your loan application.
Some direct lending companies may approve your part-time income, too. This facility can be applicable to those who are unemployed or living on disability benefits.
- Flexible lending policies
Flexible lending policy is another speciality of direct lender bad credit loans. These loans are available for every age group. Everyone from students to retired people, from unemployed or self-employed, from single parents to business persons, will qualify for these loans.
The primary concern of the lenders is your loan affordability. As long as you can afford the loan, your lender will give you the funds to be utilised as the loan.
Loan repayments are a vital part of the process. Once you receive the funds, loan repayments start next month as monthly instalments. Some people also opt for weekly instalments, depending upon their income capacity.
Direct lenders will give you the freedom to choose repayment options so that you can conveniently pay back the borrowed amount.
- The guarantor’s requirement is not there
When we talk about affordability, flexibility, and instant funding, you can assure yourself of having direct lender loans for bad credit with no guarantor.
Again, these will be loans for a shorter duration, and therefore, lenders do not ask for a guarantor while finalising the loan agreement. You can say these loans are no guarantor loans but carry high interest rates.
To calm down the interest rates, you can persuade a lender with your full-time income. Yes, if you have that part on your side, then the lender will give you a loan on the most competitive side.
In the Nutshell
Are you facing tough consequences of your poor credit score? There is no need to worry about as you can avail of direct lender bad credit loans. These are indeed valuable funding options during financial emergencies.
At the same time, you have to be very specific about your loan purposes. It is because you should apply for these loans when you do not have any other option. And suppose you have already availed of a loan. Then, you should be careful about the loan repayments.
