Many Canadian citizens regard it as a personal financial success if at some point in their life, they manage to qualify for an auto loan or a mortgage with some of the featured primary lenders in the country. However, while a good credit score may take a few years or even a decade to build, it can be tarnished with just a few returned or defaulted monthly payments, which are quite likely to occur in times of financial insecurity or as a result of a sudden job loss. Bad credit may be the result of missed payments, late payments, divorce, bankruptcy, exceeding store/ credit card limits, and various other factors. There is a variety of bad credit loans to apply for if your credit score is tarnished, depending on your requirements. Among them are personal loans, guaranteed car loans, mortgage loans, and more. Borrowers can apply for them online or directly with the lender. While some companies feature instant approval, this option is usually available to persons with perfect and close-to perfect credit scores. All other applications take more time to process. If your application is rejected, you may want to apply with creditors with more lenient requirements.
As it is suggested by the name, a guaranteed bad credit loan is a loan meant for people with imperfect credit scores. However, these borrowers fall in a high risk group and therefore, many primary lenders refuse to work with them. Of course, there are certain lenders, the so-called sub-prime lenders, who have specialized in working with exactly this kind of borrowers, and who make higher profit from the higher interest rates and fees that they charge throughout the life of the loans.
It becomes clear that bad borrowers and sub-prime lenders are just meant for each other, as the former badly need the guaranteed bad credit loans that the latter may give them. Even if most borrowers with imperfect credit records are aware of the fact that sub-prime lenders will rip off their pocket with throat-cutting fees and outrageously-high interest rates, they still need to go through this in order to recover their credit history.
Things usually go much more smoothly if bad credit borrowers are able to produce some sort of collateral upon applying for a loan with a sub-prime lender. Thus, the loan will be “guaranteed” or secured with the collateral they provide. Most sub-prime lenders accept both movable and real property as collateral. Naturally, if for some reason the borrower defaults on the guaranteed bad credit loan, he or she will lose the collateral, be it a car, a flat, or some other valuable property.
Remember that even with such lenders, you will be required to prove your ability to repay the loan. You have to be presently employed and earn regular income.