Securing Personal Loans After Bankruptcy: Secrets That Make It Happen

For those of us who think that bankruptcy is the end of the line, the good news is that this is absolutely not true. There are loan opportunities, with lenders willing to take the risk and grant personal loans after bankruptcy to those applicants that are convincing enough to ease their concerns.

There is a certain stigma attached to bankruptcy, with lenders recognizing the fact that a borrower escaped having to repay their debts by declaring bankruptcy. As a result, their view of the borrower is negative. So how can any lender be willing to grant approval despite bankruptcy?

Every person has the right to recover from bankruptcy. It might take a long time, but gradually the reputation of the borrower can be improved. And while a large unsecured personal loan may be elusive for as long as 10 years, baby steps can lead to complete recovery eventually.

The Rating Regime

There is no doubting that bankruptcy makes things more difficult for bad credit borrowers, but this is only because of the image that lenders have of an applicant with a recent bankruptcy ruling against them. Getting personal loans after bankruptcy is a challenge but there are ways to improve that image.

The fact is that lenders look at other factors when considering a loan application, and as long as these areas look strong, then the chances of getting approval despite bankruptcy is greater than they might have seemed.

These other considerations include the income and employment status of the applicant, as well as the extent of their current debt. If these factors are in good order then the application for a personal loan can be viewed positively. However, lenders cannot help but be cautious, and are unlikely to approve any large loan for quite some time.

Method In Their Madness

Of course, with the degree of risk involved in lending to someone with a bankruptcy ruling against them, it seems foolish for any lender to grant loans to them. But there are reasons why they are willing to grant personal loans after bankruptcy.

First of all, statistics show that those who have been declared bankrupt are eager to regain a positive financial status. This means that the applicant is highly motivated in meeting the repayment schedule, so granting approval despite bankruptcy is not such a major gamble.

Also, laws state that those who have been declared bankrupt cannot seek bankruptcy again for at least 6 years after the ruling. This means that the borrower is unable to escape any debts for a set period of time. The investment, in the form of the personal loan, is therefore protected to an extent.

Securing Approval After Bankruptcy

Improving your chances of getting approval on a personal loan after bankruptcy comes down to a few simple steps. Getting a secured credit card provides an opportunity to begin to rebuild a credit reputation. These cards offer limited credit, but just enough to provide a positive impression in the updated credit report.

Providing a cosigner as part of the application is a huge boost to the chances of getting approval despite bankruptcy. This is because the cosigner guarantees the monthly repayments will be made. As a consequence, the interest rate falls too, making the loan all the more affordable.

Searching for online lenders is likely to end happily, with online lenders recognized experts in bad credit lending. This means the terms of the personal loan are more suitable and the chances of approval are greater.

Why Personal Loans After Bankruptcy Are More Than A Possibility

Many people who are facing insurmountable debts bow to the pressure to declare bankruptcy. It is not an ideal solution, but unfortunately, economic reality makes it the only practical choice. But the good news is that getting personal loans after bankruptcy is now more likely, with more lenders willing to accept the role that circumstance played in the decision.

This is a very different situation to a few decades ago, when declaring bankruptcy left a serious stain on a credit reputation, causing many traditional lenders to steer clear of such applicants. Getting a loan shortly after bankruptcy was almost impossible, but today it is a very real possibility.

With that in mind, the option to take such lengths in order to escape from crippling debt is more common. The fact that loan approval despite bankruptcy is an option later on means it has become a strategic choice. But are future personal loan options not affected at all?

Justifying Loan Approval

Despite the reduced stigmatization that bankruptcy has today, there is little reason to celebrate it as an option. There is still some hesitancy amongst lenders to approve applications seeking personal loans after bankruptcy. But at the same time, there are benefits, not least the fact that financial pressure is alleviated.

But, what about when a new loan is applied for? What is needed to secure the green light and be granted approval despite bankruptcy? Well, like any loan application, it is affordability that really matters – not the credit history of the applicant. So, as long as the applicant has a full-time job and has a low enough debt-to-income ratio, approval is possible.

And the ratio should be no problem at all, since through bankruptcy the applicant will have seen all of his or her debts cleared anyway. That effectively clears the way to getting a new personal loan.

Terms To Accept

Having a route to much-needed loan funds is great to know about, but actually securing that loan is not a foregone conclusion. Applicants need to understand that the consequences of bankruptcy include making future loans expensive. Lenders willing to grant a personal loan after bankruptcy will also charge higher interest rates.

What this means is that the monthly repayments on any loan are going to be that little bit higher, which in turn raises questions over the affordability of the whole deal. But with no other significant loans to repay, the chances of being granted approval despite bankruptcy are pretty high anyway.

Also, the size of the loans are usually limited with some lenders not willing to go over $10,000, and only comfortable with about $5,000. The term of the personal loan is usually short too (5 years). This is because bankruptcy cannot be declared a second time for a minimum of 6 years after the first, and lenders want the life of the loan to end within that period.

Securing Loan Approval

So what are the best ways to help an applicant on the road to approval? There are a few ways to do so, but probably the most effective when seeking a personal loan after bankruptcy is to improve your credit score in advance.

This is usually done by clearing a few debts, but since loan applications might be hard to get, it would be worth taking out a secured credit card instead. The balance can be small, but regularly making repayments for 6 months means a positive credit history is achieved.

It would also be worthwhile getting a cosigner to guarantee monthly repayments on the personal loan. This reduces the risk involve in the loan to practically nil, so approval despite bankruptcy is safe.

People Should Only Use A Payday Loan As Their Last Resort

But sometimes there are unforeseen financial circumstances. Paydays loans are a good option to consider. Keep these tips in mind when thinking about getting a payday loan.

People should only use a payday loan as their last resort. Loans carry very high interest rates which actually have you paying close to 25 percent of the initial amount of the loan. Prior to securing a payday loan, investigate your options. A simple method to find reputable payday loan lenders to to look on websites that review them. You can get information on which companies are trustworthy and which ones have shady practices that you should avoid. If set on getting payday loans, review all information before signing a contract. There are scams that are set up to offer a subscription that you may or may not want, and take the money right out of your bank checks account without your knowledge. Do not get involved in a never ending vicious cycle. You should never get a payday loan to get the money to pay the note on another one. Do everything you can to get out of this cycle. It is very easy to fall into this trap if you don’t take steps to prevent it. The costs can spiral out of control quickly and leave you broke.

Be sure you have a clear understanding of payment due dates. Loans have high rates when it comes to their interest rates, and these companies often charge fees from late payments. It is imperative that these types of loans are paid on time. It’s even better to do so prior to the day they are due in full.Report any wrongdoings by your lender to a state agency. There are times in which payday companies act illegally that could mean that you do not have to pay the interest on your loan at all. Don’t allow yourself to be pushed around. The companies that offer payday and cash advance loans make tons of money in the business annually. They make so much money because the lender makes all profit. Before you take out a loan, spend some time researching the lender and make sure that you are receiving the lowest interest rate that you can. You should consider all fees associated with the loan. Be sure to only borrow what you need when taking out a loan. Borrowing the minimum amount of money necessary will help you minimize associated fees and interest. Avoid paying high fees by only borrowing exactly what you need. A lot of people find that they do not have another avenue when they have to get a payday loan. Look into other options first; you might be able to save money by avoiding payday debt.

If there is family or a close friend that will loan you money, talk to them before getting a payday loan. Be sure you have a clear understanding of payment due dates. Lenders typically charge extremely high interest as well as massive fees for those who pay late. Therefore, you need to be sure that you pay back your loan in full on, or before, the agreed payback date. Do not sign a payday debt that you do not understand according to your contract. If a company doesn’t give you this information, they may not be legitimate. The loan and cash advance business makes millions upon millions of dollars a year. They make so much money because the lender makes all profit. Research about each lender in order to get a good rate for your bank check.

Make sure you factor everything in, including interest as well as an other additional fees.Never refinance this type of loan if you can avoid it. The biggest problem with payday debt is that they’re addictive, in a sense, and people end up using loans to pay down loans, creating a vicious cycle of debt. Because these loans carry such high interest rates, small debts can easily turn into huge ones. If it’s not possible for you to pay off a payday loan, then you may want to apply for an inexpensive personal loan from the bank rather than pursuing a payday loan. Be careful when it comes to giving out your personal information when applying for payday loans. You will be required to give the lender personal information during the application process. Verify that the company has a legitimate privacy policy and is a reputable lender. When you are planning your payday loan needs, make the most of the advice you read here. You should be able to garner a better rate, as well as make smarter decisions. Make sure you take your time to choose the best loan for you.