If you've ever missed a payment or used a big chunk of your available credit, you know how it feels when your credit score takes a hit. Suddenly, borrowing money becomes way harder. And when you're in a pinch and need an urgent loan, it feels like the doors to traditional banking just slam shut.
Banks and traditional lenders typically want to see a solid credit score before they approve a loan. For those with low scores, this can be a major barrier.
But here's the good news—having a bad credit score doesn't mean you're completely out of options. There are still ways to secure a loan quickly, even with less-than-perfect credit.
What is an Urgent loan?
An urgent loan, also known as an instant loan or quick loan, is designed to provide fast access to funds when you need money immediately. Whether you need to cover an emergency medical bill, make unexpected home repairs, or handle any other pressing financial issue, urgent loans aim to get you the money you need as quickly as possible.
Key features of urgent loans include:
- Quick approval processes
- Minimal documentation requirements
- Often available through online lenders or mobile apps
However, these loans might come with higher interest rates, especially if you have a low credit score. But even with a less-than-ideal credit history, you can still explore options tailored for those in urgent need of funds.
Now that you know it’s possible to get an urgent loan with a low credit score, let's look at the types of loans available to borrowers in this situation.
Types of Urgent Loans Available for Low Credit Scores
When you need money fast, knowing the types of urgent loans available can help you make an informed decision. Urgent loans come in several forms, each with its own requirements, interest rates, and repayment terms. Let’s walk through the most common types of urgent loans you can consider.
1. Secured Loans
Secured loans require you to offer some form of collateral, such as property, a vehicle, or savings, to back up the loan. This makes the loan less risky for lenders, allowing them to offer lower interest rates even if you have a low credit score.
What it is:
- A loan backed by collateral, which can be seized by the lender if you fail to repay.
Benefits:
- Lower interest rates: Due to the reduced risk, lenders offer more competitive rates.
- Higher approval chances: Lenders are more willing to approve the loan since it’s secured by assets.
- Larger loan amounts: You can typically borrow more with a secured loan than an unsecured loan.
Cons:
- Risk of losing collateral: If you fail to repay, the lender can seize the asset you’ve offered as collateral.
- Longer application process: Assessing collateral can slow down the loan approval process.
Example: Gold loans, loans against property, or loans backed by fixed deposits.
2. Unsecured Loans
Unlike secured loans, unsecured loans don’t require any collateral. These loans rely solely on your creditworthiness and income, making them more accessible but often more expensive in terms of interest rates.
What it is:
- A loan that doesn’t require any assets as security.
Benefits:
- Faster approval: No need to evaluate collateral speeds up the process.
- No asset risk: You won’t lose your property if you fail to repay.
- Easy accessibility: More people qualify, especially for smaller loan amounts.
Cons:
- Higher interest rates: Lenders charge more to compensate for the risk of no collateral.
- Lower loan amounts: You might not qualify for as much as you would with a secured loan.
Example: Personal loans from NBFCs, fintech apps like Pocketly, and banks.
3. Joint Personal Loans
If your credit score isn’t great, you can apply for a joint personal loan with a co-borrower who has a stronger credit profile. This improves your chances of approval and may even get you better terms.
What it is:
- A loan taken with a co-borrower who shares responsibility for repayment.
Benefits:
- Better loan terms: Having a co-borrower with good credit can get you lower interest rates.
- Increased approval odds: You’re more likely to get approved with a co-borrower.
- Shared financial responsibility: Repayment burdens can be split between you and the co-borrower.
Cons:
- Risk to both credit scores: If one borrower misses payments, both credit scores can take a hit.
- Relationship strain: Missed payments could strain your relationship with the co-borrower.
Example: Joint personal loans taken with a spouse or close family member.
4. Payday Loans
Payday loans are short-term, high-interest loans that are typically due by your next payday. They are easier to qualify for but come with extremely high fees and interest rates, making them risky if you can’t repay on time.
What it is:
- A small, short-term loan usually due within two weeks or by your next paycheck.
Benefits:
- Quick approval: Often no credit check required, with fast access to funds.
- Easy to qualify for: Even those with bad credit can qualify.
- Immediate cash: Ideal for small urgent expenses.
Cons:
- High interest rates: Interest rates can exceed 400% APR, making the loan very expensive.
- Debt cycle risk: If you can’t repay on time, you might need to take out another loan, leading to a debt cycle.
Example: Borrowing a small amount (typically under ₹50,000) to cover urgent expenses.
5. Cash Advances
A cash advance allows you to borrow a small amount of money against your credit card’s available credit. While convenient, cash advances often come with higher interest rates than regular credit card purchases.
What it is:
- A short-term loan taken against your credit card’s available balance.
Benefits:
- Fast access to cash: You can withdraw cash from an ATM instantly using your credit card.
- No need for a separate loan: You’re borrowing against your existing credit line.
- Convenient: No need to apply for a new loan.
Cons:
- High interest rates: Cash advances typically come with higher rates than regular credit card purchases.
- Fees: There are often additional fees for each cash advance, increasing the overall cost.
Example: Withdrawing cash from an ATM using your credit card.
These different types of urgent loans offer quick solutions depending on your financial situation and urgency.
Options for Obtaining Urgent Loans
When you need funds quickly, there are several alternative options to traditional banking institutions. Traditional banking institutions may hesitate to approve loans for individuals with poor credit, but there are alternative options available that can help you secure the funds you need.
Each option comes with its own set of pros and cons, so it's essential to understand which one fits your needs best. Let’s break down some of the most popular methods for obtaining urgent loans.
1. Peer-to-Peer Lending Platforms
Peer-to-peer (P2P) lending offers a unique approach by allowing you to borrow directly from individual lenders instead of financial institutions. This method can provide more flexible terms, particularly for those with lower credit scores.
Here’s what you can expect:
- Connects borrowers directly with individual lenders.
- Typically more lenient credit requirements.
- Often faster than traditional bank loans but can have higher interest rates.
2. Online Lenders Specializing in Bad Credit Loans
For individuals with poor credit scores, online lenders specifically designed for bad credit loans can be a lifesaver. These lenders tend to have a streamlined application process with faster approvals, but the downside is that they often charge higher interest rates to offset the risk.
Here’s what to consider:
- Quick approval process, ideal for those with low credit scores.
- Higher interest rates compared to traditional loans.
- Fully online application process, providing convenience and speed.
Example: Pocketly offers quick and easy access to personal loans through their mobile app, providing a seamless experience for borrowers with low credit scores. With minimal documentation and fast approval, Pocketly is a great option for those in need of urgent funds.
3. Credit Unions
Credit unions are member-owned financial cooperatives, offering a more personalized approach to lending. Their loan criteria can be more relaxed, making them an excellent choice for individuals with limited credit histories or lower credit scores.
Here’s what makes them stand out:
- More personalized loan services compared to larger banks.
- Typically lower interest rates than banks or online lenders.
- Approval process may take longer compared to P2P or online lenders.
4. Non-Banking Financial Companies (NBFCs)
NBFCs operate outside the traditional banking framework, offering quick loan approvals even for individuals with poor credit scores. While they provide faster access to funds, their interest rates are usually higher, reflecting the increased risk they take on.
Here’s why NBFCs might work for you:
- Fast approval process, often with minimal documentation.
- More flexible lending criteria, ideal for borrowers with low credit scores.
- Higher interest rates compared to banks and credit unions.
Each of these options can help you secure an urgent loan, even with a low credit score.
So, it's important to understand that having a low credit score doesn't mean you're out of options. There are strategies to enhance your chances of approval, even when your credit isn't ideal. Let’s explore how you can improve your chances of getting approved.
How to Improve Chances of Approval
Securing a loan with a low credit score can feel like an uphill battle, but it’s not impossible. There are several steps you can take to enhance your approval chances, even with a less-than-ideal credit score.
Here’s a detailed breakdown of how you can improve your loan approval chances:
1. Demonstrating Stable Income
Lenders prioritize borrowers with a steady and reliable income. When you can prove that you have a consistent source of earnings, lenders are more likely to feel confident about your ability to make regular repayments.
- Tip: Gather documents such as your salary slips, bank statements, or income tax returns that clearly show your income pattern. For freelancers or self-employed individuals, demonstrating consistent monthly earnings over a period will boost your credibility.
- Why It Helps: Stable income provides lenders with reassurance that you’ll be able to manage your loan repayments without defaulting, making you a less risky borrower.
2. Lowering Your Debt-to-Income Ratio
Your debt-to-income (DTI) ratio represents the portion of your monthly income that goes toward debt repayments. Lenders prefer borrowers with a lower DTI ratio because it shows that you’re not burdened by excessive debt and can comfortably take on new obligations.
- Tip: Aim to reduce existing debts before applying for a new loan. This could mean paying off credit card balances or any outstanding loans that are near completion.
- Why It Helps: A lower DTI ratio signals to lenders that you’re in control of your finances and can handle additional debt. The smaller your monthly debt obligations are in relation to your income, the safer you appear to the lender.
3. Using a Co-Signer
If your credit score is low, enlisting a co-signer with a good credit history can significantly improve your chances of loan approval. The co-signer agrees to take on the responsibility of repayment if you are unable to, which reduces the lender’s risk.
- Tip: Choose a co-signer with a strong credit score and stable income. Ensure that both you and your co-signer are clear on the terms and understand that missed payments will impact both of your credit scores.
- Why It Helps: A co-signer with solid credit provides additional assurance to lenders, making it easier for you to qualify for a loan with better terms, even if your credit score is low.
4. Providing Collateral
Offering collateral, such as property, a car, or other valuable assets, can increase your chances of securing a loan. Collateral reduces the lender’s risk because if you default on the loan, they can seize the asset to recover their money.
- Tip: Be sure that the value of your collateral is enough to cover the loan amount. Lenders will evaluate the asset’s value and may offer better terms in exchange for this security.
- Why It Helps: Secured loans backed by collateral give lenders a safety net, making them more willing to approve your application even with a lower credit score. You may also benefit from lower interest rates as a result.
Following these strategies, you can make yourself a more attractive loan candidate and increase your chances of approval, even with a low credit score. It’s all about showing lenders that you’re capable of managing the loan responsibly.
Eligibility Criteria for Urgent Loans with Low Credit Score
When applying for an urgent loan, even with a low credit score, lenders typically have different criteria for self-employed individuals, salaried employees, and students. Each group must meet specific requirements to qualify for a loan. Understanding these eligibility criteria can help you prepare and improve your chances of getting approved.
Here’s an overview of what’s required for each category:
| Criteria | Self-Employed | Salaried | Students |
|---|---|---|---|
| Minimum Age | 21 years | 21 years | 18 years |
| Credit Score | Preferably 600+, but flexible with collateral or income proof | Preferably 600+ | Not applicable with co-signer |
| Income Proof | Salary slips for last 3-6 months | Salary slips for last 3-6 months | Income proof not required if co-signed |
| Employment/Business Tenure | Minimum 2 years of business operations | Minimum 1 year with current employer | Education enrollment proof needed |
| Collateral | Required in some cases (property, equipment) | Not usually required (optional) | Not required (with co-signer) |
| Additional Documentation | Tax returns, business registration, ID proof | Employment letter, bank statements | Co-signer documents, student ID |
These eligibility criteria give you a better idea of what to expect based on your status, whether you’re self-employed, salaried, or a student. Preparing the required documentation and meeting the income or collateral requirements can significantly improve your chances of securing an urgent loan, even with a low credit score.
Still have doubts about how credit score works? Check out our guide on Understanding DBT, STD, LSS & DPD in CIBIL Report
Application Process for Urgent Loans
Applying for an urgent loan can be a straightforward process if you know what to expect. Whether you’re applying online or through a traditional lender, following these steps carefully can help you get your loan approved and disbursed quickly. Let’s dive into the detailed process of applying for an urgent loan.
1. Checking Eligibility Through Lender-Specific Criteria
Before you apply for an urgent loan, it’s essential to ensure you meet the lender’s basic eligibility criteria. Different lenders may have varying requirements based on factors like your income level, employment status, and credit score.
- Income Level: Lenders usually have a minimum income requirement to ensure you can handle loan repayments.
- Age: Most lenders require applicants to be at least 18 or 21 years old, depending on the loan type.
- Employment Status: For salaried individuals, lenders may check the length of employment with your current employer, while self-employed applicants need to provide proof of stable business income.
- Credit Score: While urgent loans are available for those with low credit scores, some lenders may still have a minimum credit score requirement, especially for unsecured loans.
2. Selecting Loan Amount and Tenure
Once you’re confident that you meet the lender’s eligibility criteria, the next step is to select a loan amount and repayment tenure that suits your financial needs and capacity.
- Loan Amount: Urgent loans typically range from small amounts (as low as ₹10,000) to higher sums, depending on the lender. It’s important to choose an amount you truly need and can afford to repay.
- Repayment Tenure: Lenders often offer flexible repayment options, ranging from a few months to several years. Shorter tenures mean you’ll pay off the loan faster but with higher EMIs, while longer tenures allow for smaller EMIs but with more interest over time.
Example: If you take a loan of ₹50,000 with a 12-month tenure, your monthly EMI might be higher than if you choose a 24-month tenure, but you’ll pay less in total interest over the shorter period.
3. Uploading Required Documents Online
To process your loan application, lenders will require you to submit certain documents. This step is now easier than ever, thanks to online platforms that allow you to upload these documents digitally, streamlining the process and speeding up approval times.
Here’s a table format for the documentation required for a loan:
| Document Type | Details |
|---|---|
| Proof of Identity | PAN card Aadhaar card Valid Indian Passport Voter ID (any one) |
| Proof of Income | Salary slips and bank statements for salaried employees Income tax returns and business financials for self-employed individuals |
| Proof of Address | Aadhaar card Utility bills Valid Indian Passport Valid Driver’s License Any government-issued document showing current address |
| Bank Statements | Recent bank account details to verify financial stability and ensure smooth disbursement |
Most online lenders allow you to upload these documents directly through their websites or mobile apps, making the process fast and hassle-free.
4. Receiving the Loan Amount After Verification and Approval
Once you’ve submitted the required documents, the lender will verify the details. This process typically takes a few hours to a couple of days, depending on the lender and the complexity of your application.
- Verification: The lender checks your documents and verifies your eligibility. If everything is in order, they’ll proceed with the approval.
- Approval: Once your application is approved, you will receive a notification, either via email or SMS, informing you of the loan’s approval.
- Disbursement: After approval, the loan amount is disbursed directly to your bank account. For urgent loans, this usually happens within a few hours or by the next business day, making it an ideal option for those in need of quick funds.
Example: If you apply for an urgent loan on a Monday morning and submit all the required documents, you could receive the approved loan amount in your bank account by Monday evening or Tuesday morning, depending on the lender.
Managing an Urgent Loan Responsibly
Securing an urgent loan can provide quick financial relief, but it’s equally important to manage the loan responsibly. Proper repayment strategies will help you maintain a good credit score and avoid falling into a debt cycle. Here’s how to stay on top of your urgent loan obligations.
Here’s how to manage your urgent loan effectively:
- Repaying Every EMI Within the Due Date: Missing payments can negatively impact your credit score and lead to extra charges. Always ensure that you pay each EMI on time.
- Lowering Other Debts Periodically: By gradually reducing other outstanding debts, you make it easier to manage your new loan and demonstrate financial responsibility to future lenders.
- Making Part-Prepayments Whenever Possible: If you come into extra money, use it to make early payments towards your loan. This will reduce the overall interest burden and help you clear the debt faster.
- Prioritizing Loan Repayments: Budget your finances in such a way that your loan repayment is always a priority. This ensures that you avoid penalties and maintain financial stability.
Also learn: Understanding the Ideal CIBIL Score Range for Personal Loan Applications
Benefits and Drawbacks of Urgent Loans with Low Credit Scores
While urgent loans can provide immediate access to funds when needed, they come with their own set of pros and cons. It’s crucial to weigh these factors before applying to ensure you make the right financial decision.
Here’s what to consider:
Benefits:
- Accessibility and Convenience: Even if you have a low credit score, alternative lending options like online lenders and peer-to-peer platforms are more flexible.
- Potential for Improving Credit Score: Repaying urgent loans on time can help rebuild your credit score over time.
- Quick Access to Funds: Urgent loans offer fast approval and disbursement, making them ideal for emergencies.
Drawbacks:
- Higher Interest Rates and Fees: Loans for individuals with low credit scores often come with higher interest rates, making them more expensive.
- Shorter Repayment Terms: Many urgent loans have shorter repayment periods, which may result in higher monthly payments.
- Risk of Falling Into a Debt Cycle: Taking on a high-cost loan without a solid repayment plan can lead to further debt accumulation.
Once you’ve weighed the benefits and drawbacks of taking an urgent loan with a low credit score, the next step is understanding how to apply for one.
Getting the funds you need quickly is crucial, and with Pocketly, the process becomes even simpler. Ready to learn how? Check out the section below!
How Pocketly Can Secure a Loan Despite a Low Credit Score
If you’ve ever worried that a low credit score might keep you from getting the financial help you need, Pocketly is here to change that narrative. With Pocketly, securing a loan is much easier—even if your credit score isn’t perfect.
Here’s how Pocketly helps:
No Collateral Required
Unlike traditional loans, Pocketly doesn’t demand collateral. You can apply for a loan without having to offer up assets like property or vehicles as security.
Quick Approval Process
Pocketly’s fast and seamless loan application process ensures that you get the funds you need in no time. Even if your credit score isn’t ideal, Pocketly focuses on making the process simple and efficient.
Flexible Repayment Options
Pocketly understands that repayment can be stressful, especially when managing multiple financial responsibilities. That’s why it offers flexible repayment terms, allowing you to choose a plan that suits your budget and lifestyle.
Build Credit While You Borrow
By repaying your loan on time with Pocketly, you’re not only clearing your debts but also improving your credit score. Over time, responsible borrowing can help you rebuild your credit profile, making future financial opportunities more accessible.
Transparent Fees
Worried about hidden costs? Pocketly believes in transparency. You’ll know exactly what you’re getting into, with no surprise fees or charges along the way.
So, even with a low credit score, Pocketly can be your trusted partner in securing an urgent personal loan quickly and without hassle.
Is It Helpful? Absolutely!
Not only does this method provide you with access to fast cash, but it’s also a great way to start building your credit history. By repaying on time, you can slowly improve your credit score. For 18-year-olds or students just starting to manage their finances, this is an ideal way to get a financial boost when needed.
So whether it’s an unexpected expense or a last-minute emergency, Pocketly has you covered—making loans accessible even when your credit score isn't perfect!
Here are the basic eligibility criteria you must meet while applying at Pocketly:
- Age: Applicants must be between 18 to 60 years old.
- Employment: You need to have a stable source of income, whether you're salaried or self-employed.
- Student Status: You need to be currently enrolled in an accredited college or university.
- Residency: You must be a resident of India.
- Bank Account: Having an active bank account is required for loan disbursement.
- Mobile Number Linked to Aadhaar: For easy KYC verification, your mobile number should be linked to your Aadhaar card.
Conclusion
Unexpected financial needs can hit you at any time, and that’s where having access to a reliable personal loan option can make all the difference. Whether you're managing bills, covering an emergency, or planning something important, having the right tool to navigate through is key.
With Pocketly, you get not only a fast and flexible loan solution but also the opportunity to build your financial future—even if you're just starting out or have a low credit score.
Apply now and see the magic happening! Download Pocketly today and get the funds you need without the hassle!
FAQs
What type of loan is easiest to get with bad credit?
The easiest loans to get with bad credit are usually secured loans and payday loans. Here's why:
- Secured Loans: These loans require collateral like a car or property, which lowers the lender's risk. Since there's an asset to secure the loan, they are more likely to approve it, even if your credit score isn't great.
- Payday Loans: These short-term loans don't require a credit check and are designed to be repaid by your next paycheck. However, they often come with high-interest rates and fees, so it's important to be cautious.
- Peer-to-Peer Loans: On some platforms, individual lenders may offer loans to those with bad credit, especially if you can show stable income.
- NBFC Loans: Non-Banking Financial Companies often have more relaxed approval criteria, but expect higher interest rates.
Can self-employed individuals with bad credit get an urgent loan in India?
Yes, self-employed individuals with bad credit can still get an urgent loan in India. Many alternative lenders, including Non-Banking Financial Companies (NBFCs) and online platforms like Pocketly, provide loans to individuals with lower credit scores. These lenders typically consider factors beyond just your credit score, such as your income stability and business performance.
Can you get an urgent loan with bad credit and no credit check?
Yes, it is possible to get an urgent loan with bad credit and no credit check, though these options are more limited. Lenders offering such loans may focus on other factors like your income, employment status, or collateral instead of your credit score.
Can you get an emergency loan with bad credit and guaranteed approval?
While some lenders may advertise "guaranteed approval" for emergency loans with bad credit, it’s important to be cautious. No reputable lender can truly guarantee loan approval without assessing factors like your income, employment status, or ability to repay the loan.
What are the common requirements for applying for an urgent personal loan?
To apply for an urgent personal loan, you typically need to meet the lender’s eligibility criteria, which often include having a steady source of income, proof of identity, and proof of residence. Lenders may also request details of your current debts or financial obligations.
How quickly can you get funds with an urgent loan?
With most online lenders or platforms like Pocketly, you can receive funds within 24-48 hours after your loan is approved. The speed depends on how quickly you meet the application requirements and submit the necessary documents.
How does Pocketly help in getting a personal loan with a low credit score?
Pocketly is designed to offer flexible lending solutions, even for individuals with low credit scores. It provides quick approval and disbursement options, ensuring you can access funds when you need them, despite your credit history.
What are the interest rates for personal loans with a low credit score?
Interest rates for personal loans with a low credit score tend to be higher, ranging from 18% to 36% per annum, depending on the lender. The rate you get will depend on your creditworthiness, income, and other factors. However, with Pocketly, you get a more flexible and fair approach to interest rates 1% - 3% per month.
Why should you choose Pocketly for an urgent personal loan?
Pocketly simplifies the personal loan process by offering a user-friendly platform, fast approval, and flexible repayment terms. It’s especially helpful for young adults and those with low credit scores, making borrowing stress-free and accessible.
What types of urgent personal loans are available for low credit scores?
Urgent personal loans for individuals with low credit scores can include secured loans, unsecured loans, payday loans, and even cash advances. Each loan type comes with its own benefits and challenges depending on your needs.
Can an 18-year-old apply for a personal loan on Pocketly?
Yes, Pocketly allows individuals as young as 18 to apply for personal loans. As long as you meet the platform’s eligibility criteria, you can quickly and easily secure a loan for your urgent financial needs.
How do you improve your chances of getting approved for a personal loan?
You can improve your chances by demonstrating a stable income, lowering your debt-to-income ratio, using a co-signer with a good credit score, or providing collateral to secure the loan.