1. It may seem ludicrous that lending institutions are
willing to approve $10,000 personal loans for
people with bad credit when the risks involved are
so high. After all, does a low credit score not
indicate a lack of trustworthiness on the part of
the borrower? Does it not mean that the loan is
almost certain to be defaulted upon?
sky loans
2. Well, the short answer to both of those questions is: No There is a
general misconception that a low credit rating means the applicant cannot
be trusted, and so lenders who provide large loan approval are asking for
trouble The truth is that the economic crisis has seen many honest
people develop poor credit ratings This has forced a change in thinking
amongst lenders, with the reliance on credit scores is no longer
particularly strong These scores are only used as an indication of what
the best interest rate to charge is
3. Only then can it be calculated if the $10,000 personal loan, for example,
is affordable But how are such large loans affordable for these
applicants, and how can lenders avoid making huge losses? How These
Loans Are Affordable Calculating whether or not a loan is affordable
comes down to two factors: the income and the interest rate When it
comes to $10,000 personal loans for people with bad credit it might seem
that the application is doomed, but in fact this is not always the case The
interest rate is influenced by the credit score of the applicant
4. The simple rule is that the lower the score, the higher the interest rate
This can translate to a difference of a few hundred dollars in monthly
repayments A borrower with an excellent score of 700 may pay $500,
while a borrower with a low score of 450 faces repayments of $750
Large loan approval might seem out of reach for the latter, but what
makes these repayments affordable is not the income that is earned, but
the amount of income that is free to cover the repayments
5. To this end, the debt-to-income ratio on a $10,000 personal loan is
essential The Debt-To-Income Ratio This ratio is used as a guide by
lenders to ensure borrowers are not allowed to over-extend themselves
While $10,000 personal loans for people with bad credit can be a
lifesaver in these difficult times, repaying the loan can become difficult if
some unexpected bills come through the door What the ratio does is
protect the borrower by ensuring a percentage of their income remains
available for such eventualities
6. So, medical bills after a sudden illness can be paid, for example Only
sky loans when this is protected can a large loan approval be deemed
possible The debt-to-income ratio is set at 40:60, which means that no
more than 40% of the available income can be used to repay the $10,000
personal loan So, an applicant earning $5,000 per month may not get
the green light, while an applicant on $3,000 might be approved
7. Realistic Loan Applications Every time a lender approves a loan, they
are putting themselves at risk It is the nature of the game So, it is fair to
believe a $10,000 personal loan for people with bad credit is asking for
trouble But with debt-to-income ratio and interest calculation taken into
account, they have protected their interests quite well
8. The only remaining aspect is to entertain only realistic loan applications
Large loan approval is fine so long as the large sum is not a crazy
amount For example, while a $10,000 personal loan may be approved
for an applicant with a poor credit history, the chances of approving a
$50,000 loan are extremely low - unless there is collateral provided, of
course
