In the modern era that is filled with technology, it does not seem too odd to purchase everything from dish soap to furniture over the internet. We are so used to eCommerce that we sometimes get complacent and believe that they process of purchasing all goods and services online is just as trustworthy as purchasing them in person. This fact is especially true as it concerns loan received over the internet, and particularly guaranteed personal loans.
With bad credit, one's options in terms of loan packages are extremely limited. Therefore, online lenders are especially appealing. However, dealing with a lender through the internet alone is not without risks. Though it is perfectly fine to receive a guaranteed personal loan online, there are clear cautions that a borrower needs to heed and considerations to make in undergoing this process.
Risks Posed for Lenders
The risk that lenders take on in granting guaranteed loans to borrowers with bad credit are certainly great. Guaranteed personal loans are given based on income rather than credit score. Therefore, any borrower who makes enough money to support the repayment of this loan in theory is given the loan, regardless of a bad credit. Personal loans of this nature generally do not even require a credit check.
While all of these factors are excellent for the borrower, they make the venture really risky for the lender. Therefore, lenders who work with guaranteed personal loans require two paybacks for this risk. First, the term on the loan is short - asking for the borrower to repay the loan within a paycheck or two. Second, guaranteed personal loans generally carry higher rates of interest to compensate for this risk.
The lender stands to make more money on a guaranteed personal loan than on a regular personal loan which carries a lower interest rate. However, to further temper the risk, the loan is granted along with access to the borrower's bank account and the lender is then able to deduct the repayment straight from the borrower's account upon his next payday or two.
Risks Posed for Borrowers
For these reasons, borrowers are the real ones taking a risk in receiving a guaranteed personal loan. Because of the quick turnaround of these loans and the need to provide bank account information, the borrower is really giving the lender full access to his accounts. That is why dealing with online lenders can be especially hard - if a borrower does not take the time to check out the business practices of the lenders he is working with he puts himself at risk of getting his bank account cleaned out with little reward.
The answer to this risk is doing a thorough background check on any lender that you are considering. This check should be conducted via the Better Business Bureau (known commonly as the BBB). This will provide you with a detailed assessment of the business you want to work with as well as a list of customer reviews and complaints. While one or two complaints are common to any business, you need to pay attention to the overall grade and volume of complaints. Only do business with a lender whose grade is higher than a B.
There Are Also Advantages
With all of these risks, it is common to feel that the option of a guaranteed personal loan for people with bad credit is really not so great after all. However, there is no better choice since no credit check it required for these loans and the funds are deposited quickly into your account. As long as you do the needed research into the lender that you want to work with, guaranteed personal loans are a great option.
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