If you want to take a loan immediately and your CIBIL/Credit score is good then you have many ways to take a loan. But what if your CIBIL is bad, then how will you be able to take a loan? Friends, you do not have to worry at all. In this article, we will give you information about low credit score loans and low credit score loan apps.
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What is CIBIL score?
A borrower’s creditworthiness is shown by a credit rating or credit score, which is a numerical value. The range is 300 to 900. A higher credit score indicates lesser risk. Credit scores are determined by the information obtained by credit bureaus after taking into account a variety of variables, including repayment history, utilization ratio, past due payments, etc.
Banks or independent lenders typically give preference to borrowers with credit scores of 750 or better and provide them low-interest personal loans. For borrowers with CIBIL scores under 700, on the other hand, strict eligibility requirements and higher interest rates are applicable.
Importance Of CIBIL Score
Credit Worthiness
Lenders might use the credit score to assess a borrower’s trustworthiness. Based on past repayment history and trends, it shows the borrower’s ability to pay back the loan amount. The most significant and precise metric for determining a candidate’s creditworthiness is their CIBIL score. Furthermore, high CIBIL score applicants receive attractive loan benefits.
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Lower Interest Rates
For borrowing money, borrowers must pay a little amount of interest. Each bank or lending company assesses distinct rates to the people based on their CIBIL score. In contrast to lower scores, higher scores result in cheaper interest rates and less paperwork. Sometimes, candidates with lesser credit scores may not get an approval for the loan. A solid credit score is therefore essential for a personal loan.
Faster Loan Approval
Your CIBIL score and the time it takes for your loan to be approved are directly linked. So, faster document processing and disbursement result from better scores. Conversely, lenders scrutinise you closely if you have a lower score.
Loan Limits Increase with Lengthier Terms
The ability to negotiate for a larger loan amount is another benefit of having a good CIBIL score. Lending institutions frequently are willing to supply significant quantum amounts because your excellent score talks to your dependability. Furthermore, those with a good score can get loans with a longer term.
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Which Lenders Offer Low Credit Score Loans?
If you have a low credit score, providing collateral can help you get a good deal on loans. Providing collateral lowers the risk associated with lending. You can also negotiate with the lenders to offer you lower interest rates. Such loans that are given against collateral/security are known as secured loans.
However, if you are seeking unsecured loans without any collateral to put up, you can be eligible for one if your monthly income is on the higher side and you work for a reputable company. Banks will charge you greater interest rates and there’s a risk you’ll get a smaller loan amount in these circumstances. For instance, if your loan amount eligibility is typically between 80% and 90%, it will only be 65% to 70% due to your bad credit score. There are also chances that you will be offered shorter repayment tenures as banks will look at collecting the loan amount as quickly as possible.
Apart from banks, there are two other options that you can try if you have a poor credit score and wish to avail a personal loan –
Peer-to-Peer Lending (P2P) – Some lending websites, known as peer to peer lending websites, provide low credit score loans up to Rs. 5 lakh with terms between 12 months and 60 months.
Related: What is the average rate of interest on P2P lending in India?
The Money Club chit fund platform also works as a reliable P2P lending platform because the money collected from the members is lent to the highest bidder (reverse bidding). The other members share the balance money as their income. With the power of technology, the Money Club helps form trusted communities across India to ensure people save more, borrow at low-interest rates, and invest for maximum returns. It is a concept where clubs are formed with their peers. They agree to pool in a fixed amount and bid their interest for the pooled amount. Comparing it with the interest charged by banks over personal loans that are 15% p.a, we have seen that individuals pick up money at very low interest which can further become lower or even become profitable depending upon returns offered by bidding in other rounds. Till date the interest paid by the net borrowers on The Money Club is only 1/3rd to 1/4th of what they would have paid to the banks.
Since its inception, Money Club has more than 3.5 lakh registered members.
Related: How Does The Money Club Mobile App Work?
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Non-Banking Financial Companies (NBFCs) – Many NBFCs and fintech platforms provide you a personal loan despite your bad credit, however they could charge you a little higher rate of interest. NBFCs are typically more lenient with credit scores than banks.
Low Credit Score Loan Apps
If your CIBIL score is low, and you want to take a loan, then you can apply with the help of your aadhar card and pan card. Here we are going to tell you about some low credit score instant loan apps with the help of which you can get a loan with the help of your phone from the comfort of your home. But before that, let us know about the eligibility criteria:
Eligibility
The following are the terms and conditions that you need to follow to get a personal loan with a low credit score:
- Must be an Indian citizen.
- Age should be between 22 and 58.
- Should have a monthly salary.
- Aadhar linked mobile number will be required.
- A smartphone and internet is required for the application.
- NACH (Loan EMI Auto Debit) approval can be given through internet banking or debit card which can increase your loan limit.
Here is a list of the low credit score loan apps:
- Paysense
- MoneyTap
- Dhani
- India Lends
- KreditBee
- NIRA
- CASHe
- Money View
- Early Salary
- SmartCoin
- Home Credit
- LazyPay
- mPokket
- Flexsalary
- Bajaj Finserv
- PayMeIndia
- LoanTap
- Amazon
- RupeeRedee
- StashFin
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How To Apply For A Personal Loan On These Low Credit Score Loan Apps
Step1: First of all download any of the above mobile applications from Google play store.
Step 2: Now register with your mobile number.
Step 3: After that submit your personal information like your name, address, email id, occupation details etc.
Step 4: Now you will get some credit limit.
Step 5: After this upload all the KYC documents.
Step 6: Then, submit the bank details where you want to get the loan.
Step 7: Now submit the application form.
Step 8: As soon as the loan is approved, you will get the loan amount in your specified bank account.
Low Cibil Score Loan App Fees and Charges
Interest: You will have to pay interest up to 36% annually on the loan taken from these low credit score loan apps.
Processing Fees: You will have to pay a processing fee on the loan which can be up to about 5%.
Platform Fees: Sometimes you have to pay platform fees for using these low credit score loan apps.
Penalty: Late repayment of loan may lead you to pay penalty on daily basis.
GST: You will have to pay a GST charge of 18% on all fees and expenses.
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Low Cibil Score Loan App Benefits
- You can apply for a loan from anywhere in India anytime.
- These low credit score loan apps are approved by RBI and registered by NBFC.
- Whether you are in any job profession, female or male, you can apply for these loans.
- These low credit score loans give you loans without guarantee or security.
- These apps give you loans without your credit history (CIBIL).
- These low credit score loans apps give you a loan only on your KYC documents (Aadhaar and Pan Card).
- Here you can get loans from Rs 1000 to Rs 5,00,000.
- You can get these loans in just less than 5 minutes.
- You can get these loans without any hassle, and from the comfort of your home by just doing KYC.
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How can you get a personal loan on a low CIBIL score?
Note: In order to get a low cibil score loan, you may have to pay interest up to 36% p.a.. Apart from this, you will get less amount of loan in the initial stage. But, if you deposit the amount on time, then the limit will start increasing gradually and then you can take a maximum loan up to Rs 5,00,000. You must read the terms and conditions of the loan agreement, interest rate, processing fee, etc. of that platform carefully so that you do not face any problem while taking the loan.
