Extramile Finance

Urgent loans are small emergency loans. They are aimed at subprime borrowers who need money to tide over during emergencies. They have several names, such as payday loans, bad credit loans, and the like. The purpose of all loans is the same, and they all work the same way.

Approval for urgent loans is not strictly required. You need to fill in the application form given on the website of a lender from whom you want to borrow and submit it online. The decision is made quickly without any formalities, and the money is lent to you the same day.

Features and benefits of bad credit urgent loans

Here are the features and benefits of urgent loans:

• A bad credit rating is not a snag

Almost all types of loans are available to subprime borrowers, including personal loans and mortgages, but lenders have the bare minimum credit score requirement. It means having a score lower than that removes every possible opportunity to apply for a loan.

However, when you apply for an urgent loan, lenders accept your applications as long as your credit score is not in the very poor credit rating range. According to Experian, 561 to 720 is a bad credit score range. Whether your score is 561 or your score is 720, your application will be accepted.

However, most lenders would avoid entertaining your application if your credit score range is less than 561. Note that acceptance and approval are both different. Just because lenders accept applications with such a low credit score, it does not mean that they will approbate, too. Approbation largely depends on your repaying capacity.

• No hard credit checks are made

Urgent loans are generally preferred by subprime borrowers who have been refused elsewhere. The significant reason for repudiation of their application form is your poor credit rating, but when you apply for urgent loans from a direct lender, no hard checks are made. It means no hard inquiries are recorded on your credit report, and hence, there is no risk of losing your credit score.

Every time you apply for a loan, lenders will run a hard credit check. These inquiries are visible to other lenders and remain on your credit file for two years. This means that for the next two years, your chances of qualifying for lower interest rates are quite low.

When you take out urgent loans for bad credit from a direct lender, they do not run hard credit inquiries. The decision is solely based on your income sources. If you prove that you have wiggle room in your budget to discharge the debt on time without compromising on your essential regular expenses, you will be approved.

• Instant approval

In case of an emergency, you would certainly want an immediate injection of cash. Borrowing from traditional banks is not easy because it includes loads of formalities. They run hard credit checks and require you to submit proof of income and bank statements. It may take a couple of days to complete the process. Of course, you cannot wait for days if you need money urgently.

Fortunately, you do not have to wait too long when you apply from a direct lender. Lenders use AI algorithms to shortlist your application. Once the application is accepted, soft inquiries are made to know your credit score. Soft checks help your lender know about your contact details. If a lender finds that you can repay the debt based on the income details you provide in the application form, they will immediately approve your application. It takes a couple of hours to complete the process. Once the loan process is finished, money is deposited in your bank account.

• No collateral

Urgent loans require no collateral, and therefore, there is no risk of losing collateral in case you make a default. Instalment loans to be paid back within a period of more than five years often require security. If you fail to discharge the debt on time, your lender will repossess the collateral.

Normally, the collateral is your house. The consequences could be worse if you make a default on a secured loan. Despite securing your loan, there is no guarantee that you will obtain lower interest rates.

Urgent loans are not secured. In case you fall behind on the payment, lenders cannot take any of your assets into possession to cover their money. However, bear in mind your credit score will go down. Your lender would contact collection agencies, and if you still do not respond, they could drag you to court.

Once a CCJ is issued against you, you will have to abide by the orders of the court. A CCJ, whether or not satisfied, will continue to remain on your credit for up to six years. As a result, your credit score will significantly plummet. You will end up being in a very poor credit score range.

• No guarantor

Even though your credit score is not so perfect, lenders would not ask you to arrange a guarantor. Normally, when a loan application is approved with a bad credit rating, lenders expect you to arrange a guarantor with a good credit score whom they can call in case you make a default.

Arranging a guarantor could be challenging because when you refuse to make a payment, your credit score will also be affected. Guarantors are usually your close friend or family member. You should always try not to make a default because otherwise, their borrowing capacity will also be impaired.

The final word

Direct lender loans could be very helpful when you need money to meet unforeseen expenses but bear in mind that these small loans come with high interest rates because of your poor credit rating. Make sure that you have enough income to repay your debt. Do not borrow money if you are not certain about your repaying capacity. Do research to compare interest rates offered by different lenders, and then choose the one that suits you best.