Though most of us would like to lead a life free from debts, it does not always happen that way. We are forced to borrow because the income we earn is just enough to meet our daily, weekly and monthly commitments. With inflation inching upwards each year and with incomes stagnating, we need to do a jugglery act to keep things moving in our homes.
When it comes to buying things for our homes (whether it is fixed or movable assets) we often have to fall back upon loans and other forms of borrowings.
There are millions of homes in the country where there are more than one credit card. In many homes they have a stack of credit cards. Hence, it is quite possible that they might end up overspending and get themselves into a debt trap. In such situations, it is quite obvious that they would find their credit record going for a toss.
Apart from such unabashed borrowing, many people could end up with a bad credit history because of certain things which are not exactly under their control. It could be because of illnesses, loss of jobs, layoffs, retrenchments and so on.
The moot point is that when credit history takes a beating, buying things which are necessary for homes could often become a big problem.
What Is The Way Forward
Borrowers can be sure that banks and financial institutions would not be willing to stick their neck out for borrowers with impaired or poor credit history.
So, what is the way forward in such situations?
The answer perhaps might lie in what is known as guaranteed bad credit approval catalogue. This is becoming quite popular amongst both borrowers and retailers and other outlets, both in the online as well as brick and mortar environment.
Hence, this certainly is a big boon for those who suffer from bad or impaired credit due to various reasons. This is a scheme which helps people with bad credit to buy things which are required either for their homes or for other purposes.
However, there are a few things which you must know before you actually sign on the dotted line as far as these types of credit approvals are concerned.
How Do They Guarantee Loans To Those With Bad Credit
With competition hitting many small and big retailers hard, they need to find out ways and means they can reach out to more number of customers.
Towards this objective, there is no doubt that choosing this guaranteed loans for catalogue product is a good option. But let us make one thing clear. There is nothing in this world that comes for free.
Hence, these so called guaranteed approvals for bad credit customers have a big price tag attached to it. That is in the form of interest cost which should be borne by the borrower. It is quite high and therefore as a borrower you must exercise care and caution. You must be sure that you do not go overboard with such bad credit approvals.
In fact there is very little chance of retailers allowing borrowers to go overboard. They start off with a small approval which might perhaps be even as low as $50.
They are willing to take the risk and find out whether the borrower is able to service the same regularly and promptly. If they find that the borrower is good at repayments then they would not mind increasing the credit limit gradually and with passage of time.
What Is The Repayment Period
The repayment period of these guaranteed bad credit approval catalogue loans could be anything from 3 months up to 9 months and in some cases it also could be for 12 months also. This again would depend on the sole discretion of the dealer or retailer and the risk appetite he is willing to take on the borrower or buyer. In many cases they retailers could also insist on weekly payments should it be possible.
The repayment is generally divided into monthly EMIs which are spread over the tenor fixed by the dealer. The repayment has the principal and interest component built into it. Therefore once the repayment is completed, both the interest and principal components are taken care of.
How Is It Different From Bad Credit Approval Catalogue
There are some differences from the conventional bad credit approval catalogues which we might come across. These loans are basically a bit dicey from the customers’ point of view. The onus fully lies on the retailers to either approve the application or reject it.
However this is not the case as far as the guaranteed bad credit approval catalogue financing options are concerned. As the phrase itself suggest there is an automatic approval attached to it and this happens even if the borrower has a bad credit history.
The credit history in fact is not given too much of credence. It all boils down to the risk taking capability of the borrower and the conviction level he has with the borrower and his ability to repay the loans.
It Is A Good Avenue To Built Credit Record
Again If your credit record has been damaged beyond repair there is no doubt that this could be a good way to rebuild your credit history.
You can start with those small payments of $50 spread over say three of four months. This could amount to a small figure of say around $14 per months or four months or five months depending on the interest outgo. If, as a customer, you are able to exhibit a good repayment track record, the retailers will be able to increase the credit limit.
By the way, the repayment will also get recorded in a central database and this will help you to look for other borrowing avenues including those belonging to banks and financial institutions.
The Final Word
Yes, there is hardly any doubt that such bad credit approval catalogue can be a win-win situation for all the stakeholders. But it is a costly proposition from the buyers’ point of view because of the high interest component which automatically gets built into the loan. Further when you have no other source of funds for such catalogue purchases this could certainly come in very handy.