Instant Decision Bad Credit Loan

Interestingly enough people with bad credit can often get a decision on loan approval much faster than people with good credit.

This is so because there are a number of loan products designed for people with bad credit where the loan decision is simply based upon the borrowers’ income. The lenders that make these instant decision loans only look at the borrowers’ income and not their credit worthiness.

This means that is usually possible for those with a steady source of income such as a job or government benefit check to get an instant decision on a loan. Many online lenders will make instant decisions as will some loan companies.

Drawbacks to Instant Decision Loans

There are a few drawbacks to instant decision loans including high interest rates and a short repayment period.

Lenders charge much higher interest rates on such loans particularly to people with bad credit because they are taking a higher risk by issuing such loans. The interest rates on some of these loans can be 20%, 30% or higher, particularly on cash advance and payday loans.

Another drawback to instant decision loans is the short repayment period. These are often short term loans that have to be paid back in less than a month to avoid high interest rates. Some of these lenders will charge a substantial fee to extend the length of the loan repayment period.

How Instant Decision Loans Work 

Most instant decision loans use online approval even the ones taken out in check cashing stores and other businesses. The borrower or the loan company employee goes to a website and types in the loan information. A person at the loan company’s office then checks to see if the person meets the criteria for the loan. If the person meets the loan criteria, the loan is issued and the cash is made available instantly.

Direct Deposit

Most instant decision lenders take advantage of direct deposit or electronic funds transfer technology. In a direct deposit or EFT the lender puts the money borrowed directly into the borrower’s bank account electronically. The advantage to this method is that the borrower will have instant access to money.

For those who don’t have a checking account, the lender may load the money onto a preloaded debit card. Such preloaded debit cards can be used to make purchases like credit cards or to get cash through ATMS. Lenders may also wire the money to a Western Union or Money Gram location where the borrower can pick it up. A fee will usually be charged for this service.