Let’s face it, because of the number of people that are in debt or credit problems, there are many people in North America that have poor or bad credit. Poor or bad, this is still a potential market that businesses can still cater to despite the higher risks they pose with credit. This is why there are guaranteed personal loans, at times called payday loans, that are made available to poor or bad credit history borrowers. This is usually offered by non-bank lending institutions. Borrowers with good or impressive credit can get signature loans from banks where nothing is particular is required from them except their signature to back the loan up. Because of their lower risk, good credit people get better terms on such loans with relatively lower interest rates. To provide guaranteed loans to risky borrowers however, lending firms need way more than a signature to secure their investments.
To get a guaranteed loan, a borrower must first have a job steady for at least 3 months and have a back account that is in good standing. If a borrower is in the process of discharging bankruptcy, he can’t take advantage of a guaranteed loan. This could risk court intervention and adding the new loan to the proceedings may be at the expense of the lender. Also, guaranteed loan applicants should not a minor and should be at least 18 years of age to be legally bound by their decisions. The amount of a guaranteed loan is usually decided with the demonstrable monthly income and bank account balance of the borrower and it doesn’t involve the borrower’s credit score at all. In many cases, guaranteed loans are used short term by borrowers and in most times even paid by the borrower’s next pay day.
Guaranteed loans are easier and faster to process therefore approval and release of the loan is also done quickly. Once it is approved, the lender directly deposits the loan amount to the borrower’s bank account and this is often done overnight. The borrower grants the lender direct access to his bank account so that rather than waiting for the borrower to pay, the lender debits the bank account directly each payment. This is what allows lenders a sense of security or guarantee so the lenders can overlook a borrower’s credit score. Just in case the bank account of the borrower gets over drafted because of the payment made on the loan, it becomes the responsibility of the bank to collect on the borrower and not the lender.
There are many critics that disparage payday loans saying they take advantage of those that are in dire need, and that they charge enormous terms to those that are least able to pay it. But at the end of the day, it still is just business and they are only doing what they can to cover the risks involved in offering this type of loan to the market. It is still the choice of borrowers if they have no choice and opt to go for guaranteed loans.

Author's Bio: 

Rachel Schwartz is the Marketing Manager of BHM Financial - one of the most trusted names in the bad credit loan industry. This company may be able to help you reach your financial goals. Please visit our Bad Credit Loan website or our Blog and find out today.