Why Low Credit Score will Not Prevent Consumers from getting online Personal Loans

In the past, it has been difficult for consumers with bad credit or low credit score to obtain personal loans but this trend is changing as we notice more lending for these consumers. Both formal and non formal lending institutions are discovering that they cannot do without the bad credit consumer. Today, the online personal loans have become popular. These loans are offered by banks and other non-traditional lending institutions.

Good examples are cash advance, payday loans or next pay-check loans and peer to peer loans. Before the economic crisis which hit many parts of the globe in 2007, the lending industry was thriving well. Many consumers borrowed more than they could handle to repay back. Because of the low interest rates on loan facilities, people were willing to borrow more and the lenders had the capital to dish out to consumers.

However, when the credit crunch hit the economy, things turned around and consumers were not willing to borrow because they did not have the money to repay. Banks and financial lenders held with them a lot of money and they had to device ways to entice the consumers. What happened is that they made the interest rates very low and consumers were more attracted.

There was over borrowing and multiple borrowing and this resulted to aspects like loan delinquencies, foreclosures, bankruptcies, loan defaults and other financial challenges. Many consumers found themselves on the receiving end as their credit score dropped to record low levels. Some of the credit score effects they suffered during the pre-economic crisis and post economic crunch are still reflecting in their credit reports.

In the recent years, consumers who have remained locked out of borrowing by traditional financial institutions have seen some limelight. The lenders who had abandoned the consumers with bad credit are today making a comeback. In addition, there are trends of fast short term cash advances, which are designed by payday lenders.

Consumers still struggling with the bad credit report can gain access to short term loans like payday and peer to peer loans. Banks are offering salary advance loans or cash advance loans which are basically secured by a person’s salary. One of the things which are making consumers to develop more interest in the short term loans is because of the loan approval flexibility.

These loans are easy to obtain and considering that previously, one of the impediments consumers have faced is the complexity of acquiring a loan approval. Getting a loan has been very cumbersome and frustrating and this is why consumers are even willing to go for the high interest rate payday loans offered online. There are no credit credits for you to obtain these short term online loans like payday.

The loans are approved within a few hours or less than 24 hours and the funds are released to the consumer’s account in less than a day or two. Because consumers still in bad credit are unable to save for emergencies, this means that when pressing financial needs arise, they do not have money at their disposal to meet these needs. The only place they can turn to is the fast cash online personal loan facilities.