Is it possible for defaulters to get a personal loan

With the defaulter tag it becomes really difficult to avail any loan, personal loan being one of them. Defaulter is someone who missed payments on any previous loan or credit card for a number of occasions. Loans are given on the basis of the creditworthiness of the applicants and the amount is also decided on that basis. The defaulters usually have a poor credit rating that makes availing loans a tedious task.

However, personal loan comes with certain leverages for the borrower, thus if applied in a tactful manner, the defaulter can avail this loan for low CIBIL score. Here are the factors that must be kept in mind:

• A better salary record

In case your salary prospects have improved from the time you defaulted, you can use the same as an important point of consideration in your loan application. An increase in income implies increased repayment capacity which in turn reduces the probability of defaulting on the loan repayment. To convince the lenders, you can furnish your salary record or any other proof of additional income. 

• A guarantor

In case you are economically stable but carry a low CIBIL score because of previous default, taking the loan in the presence of a guarantor is a sure shot way to get your loan approved. This is because the presence of a guarantor mitigates the risk which the lender faces at the time of providing a loan to a previous defaulter. However, in this case, the guarantor should have an exceptionally good CIBIL score. 

• Collateral loans

You can make use of your assets to avail loan and surrender them as collaterals. Assets such as shares, gold, property, deposits etc., are often given as collaterals to banks and other financial institutions for the purpose of availing any loan except the online payday loans, which can be availed in the absence of any collateral. The loan amount in the case of loan against collateral depends upon the present value of collateral offered. 

• Try for a lower amount of loan

Applying for a higher amount of loan with a lower CIBIL score poses a greater risk to the lender as nonpayment of the same can bring a great financial loss to the lender. Instead when someone applies for a smaller amount of loan, it is more convincing for a creditor to think of the aspect of sanctioning the loan. 

• Borrow at a higher rate of interest

The most effective way to obtain a personal loan in case of CIBIL defaulters is to get the personal loan by paying a higher rate of interest. This might increase your chances of getting the loan sanctioned, but, it will bring a greater impact on the personal expenses. This option is not advisable for individuals having a limited source of income. 

• Partner's CIBIL Score

If your CIBIL score is on a bad side, but, your partner's CIBIL is on the good side, then their assistance can be used for the purpose of availing the loan. In this case, you can make your partner as a co-applicant at the time of availing the loan and get your application sanctioned. 

• Debt consolidation

Many banks these days are offering loans for the purpose of debt consolidation. The chances of going into default increases when there are multiple credit cards or personal loans belonging to an individual. This can be overcome by opting for debt consolidation loans and steering the repayment through a single source. This helps in the prevention of default in the near future and also helps in the management of financial stress. 

CIBIL score is a very significant aspect when it comes to availing a particular type of loan. An individual should take all the essential steps to ensure the improvement of his/her credit score.