In large part, this is the result of most financial institutions and the lending companies tightening their lending requirements. Just a few short years ago most of these companies would qualify anybody for a loan, as long as that person had a pulse and could fog a mirror. However, today the situation is completely different. Consequently, many people that just a couple years ago could go out and successfully qualify for a regular loan can no longer do that and must resort to services of bad credit loans and their respective lenders. On one hand, this is simply because many lenders made it much more difficult for people to qualify for their loans. On the other hand, many people have suffered financially as a result of a challenging economy and their credit has suffered as well. Given all this, unless a person has stellar credit history and a very high credit score, it is nearly impossible to qualify for a good low interest personal loan, which is why a lot of people choose bad credit loans for their borrowing needs. Of course, the very definition of bad credit loans is a rather relative term because different lenders perceive bad credit differently. What one lender considers as bad credit can be a totally different scenario with another lender.
Overall, there are many bad credit loans lenders on the market and they offer a wide variety of loan products to their prospective borrowers. Different categories of these lenders will have completely different loan products and qualification standards. A regular personal loan lender is likely to be very different from one of the payday loan lenders, although both provide bad credit loans to people.
Payday loan lenders provide small personal loans to people and usually make these loans due to be paid back on the applicant’s next payday. Amounts of these loans are usually lower than the more traditional personal loans but they have many perks and benefits. One of the main benefits that payday loan lenders provide is that, although their loans are considered to be bad credit loans, these lenders normally do not even conduct credit checks on their prospective borrowers. The reason they don’t do this is that they simply do not base their lending decisions on a person’s credit rating, unlike most other lenders do. In turn, qualifying with payday loan lenders is usually much easier than with another type of lender. They usually ask for just the most basic information about the applicant and some lenders do not even go the distance to verify that information. One of the most important things that payday loan lenders look for when considering an applicant for one of the bad credit loans is whether this person has a job or not. These lenders want to lend money to people with current employment and they do base their decision on this fact alone most of the time. In terms of specifics, most lenders want to see at least a $1000 monthly income for a potential applicant but some lenders will allow an application to go through with an $800 shown monthly income. Knowing this information helps payday loan lenders to decide if a person is a good potential borrower and how much they can safely qualify this person for. First and foremost, payday loan lenders are in business for profit and, as such, when providing bad credit loans they want to make sure that they will receive their loan payments back with interest. Knowing their applicant’s employment and income information helps them properly evaluate all the risks and mitigate potential losses.