When we find ourselves in a tight financial position, it is not unusual to miss loans repayments or default completely. When that happens our credit rating takes a nose dive, making the idea of getting a $5,000 personal loan little more fantasy, but it is not actually an impossibility at all.
It is true that mainstream lenders generally avoid such applicants at all costs, but that does not mean that no lender will approve such applications. In fact, bad credit personal loans are by no means rare these days, and with an economic turnaround on the horizon, the risks are not so large. Getting personal loans to clear bad credit is to be expected, since it is widely regarded as the most effective way to recover a good credit rating.
Of course, even if these facts are accepted, popular opinion is that personal loans worth $5,000 are perhaps a little too rich given the situation the applicant is in. But the reality is that larger loans are available. It simply depends on who we go to.
Why Large Loans are Possible
The logic behind getting a $5,000 loan is pretty clear. Depending on the financial obligations the borrower already has, it could be enough to ensure several debts are cleared, thereby freeing up more income to cover the monthly loan repayments.
The problem is that, as a personal loan to clear bad credit, the more that can be secured the better. But the obligation increases accordingly, making the pressure to live with the payment schedule quite high. For lenders, this is a very important part of the whole transaction.
There are two forms of personal loans, namely secured and unsecured. The secured type is almost certain to be accepted because the loan is made on the back of collateral, thereby granting the lender a means by which to regain losses should the borrower default. In this case, loans worth $5,000 or even more, are not so hard to get.
With unsecured loans however, there is no collateral, thereby increasing the risk for the lender. It is only to be expected then that bad credit personal loans are much more difficult to get. The lender relies on the income details of the borrower to ascertain if the loan can be repaid.
Personal Loan Qualifications
Of course, more than just proof of income is required to get that $5,000 personal loan, though being able to show statements relating to a 90 day period from the date of the application is generally expected. An applicant will also have to show they are not bankrupt and that they have a checking account in a bank.
What is more, personal loans worth $5,000 or more will need proof of employment documentation and a social security number, as well as a form of ID. By having these documents in order, the chances of succeeding is getting such a large bad credit loan sum is greatly improved.
Online Financing Companies
However, mainstream banks and financial institutions are very strict when applying criteria, which makes a $5,000 personal loan quite difficult to get from them. The fact is that online lenders are much more open to accepting the added risks involved in approving loans to clear bad credit.
These lenders must be checked out before signing up to any bad credit personal loans, but the applicant also needs to supply documentation, by scanning an ID card and salary receipt. But, when everything is in order, the chances of getting a loan worth $5,000, and even more, is certainly within reach.