It is normal for those with poor credit histories to believe that the chances of securing a large loan are pretty small. We have been brought up to believe lenders hate bad credit borrowers, so approving an application for a $10,000 loan with bad credit can seem very far from possible. But this is actually far from the truth.
Lenders are as open to lending to bad credit borrowers as to anyone else. The only hurdle to approval is the criteria and conditions that make up their lending policies. These relate mainly to your employment status and the state of your debt-to-income ratio, but as long as these are in good order, even getting loan approval with no security is a realistic possibility.
Also, for one seeking a large personal loan, but with the hindrance of poor credit scores to deal with, approval can come down to the type of loan that is applied for. The right loans package has the right terms, and there are some that even those with terrible scores should carefully consider.
1. Your Local Bank Loans
In truth, this is the first option that any of us think of, before weighing up the chances of getting approval. Usually, we believe those chances to be low, so we look elsewhere. But approval is possible, even on a $10,000 loan with bad credit as long as the deal is proven affordable.
Lenders really only want to be sure they will get their money back (with interest, of course) so even approval with no security is possible. However, approval comes at a cost. Typically, the interest rate charged is high, and the loan limit is low. This means a $10,000 loan is harder to get.
The conditions applicants must satisfy include being full-time employed for at least 6 months prior to submitting the application, and having a debt-to-income ratio that ensures monthly repayments fit comfortably within the 40:60 limit. Satisfy these, and large personal loans are within reach.
2. A Private Lending Source
When traditional lenders, like local banks, are expected to reject your application for a $10,000 loan with bad credit, then an alternative needs to be found. Often, approaching a family member is the best one - and it certainly has advantages. Not least amongst them is that interest is generally not charged, and the repayment terms are always flexible.
However, there are other private lending sources other than your own family members. These include independent private lending firms, not affiliated to any large financial institution. These firms are experts in bad credit lending, so offer terms that are ideal for your position.
For example, the chances of getting large loan approval with no security are greater because the terms of the loan deal ensure repayments are more affordable. A longer repayment period keeps repayments, even on a large personal loan, quite low and so the chances of default are fewer.
3. Using Home Equity For Loans
A third option involves using home equity as security. This means that a share of the value of your home is risked, but when seeking a $10,000 loan with bad credit, it is almost a guarantee of approval. The reason is the value that lenders place on property as a form of security.
Also, since equity relates to the value of a home that is not covered by a mortgage, the size of the equity can be extremely high. In fact, while seeking approval with no security on a $75,000 loan is practically impossible, equity makes it a safe bet.
This makes equity ideal when seeking very large personal loan, and with security ensuring interest rates are kept low, these loan deals can also be affordable.
