Bad Debt Loans Are Not As Bad as the Name Suggests

There is a plethora of loans out there just waiting on qualified borrowers. These range in size from small credit card loans, to substantial loans for large acquisitions such as pricey real estate. There are similarly large numbers of lending institutions literally dying to make these loans available to customers, as this is one of their top revenue streams. These institutions include building societies, banks, and credit unions, to name a few. It is very rarely that one organization will offer all types of loans though, as each institution tends to specialize. One of the types of loan that is not very popular among the lot is one known as bad debt loans.

Two Types of Bad Debt Loans

There are basically two types of bad debt loans: secured and unsecured. The bad debt loan for which collateral has been presented to guarantee the loan is referred to as a secured bad debt loan. Those bad debt loans for which no collateral has been provided are known as unsecured bad debt loans. As is to be expected, borrowers of unsecured loans will receive less favorable terms than will borrowers of secured loans, simply because of the non-provision of collateral.

Those who will seek to avail themselves of bad debt loans are people usually steeped in debt, and who find they have very little or no option of acquiring funds elsewhere. Due to their bad financial situation, and in most cases poor credit rating, chances of obtaining a loan via the regular channels are very small. Their goal, in most instances, is a temporary solution to current and pressing debt obligations. The solution, to which many will gravitate when faced with such a scenario, is the bad debt loan. Despite what its name might suggest, bad debt loans are not necessarily taken out for the purpose of making good on bad debts. In fact there are a host of other reasons why people will access this loan facility, some of which have absolutely nothing to do with debts owed. People may see an excellent bargain that they don’t want to pass them by, they may need some quick cash for a sudden emergency until pay day, or they may see a way to turn a quick profit and prefer not to use their own funds which could be inconvenient. There is also the case where the bad debt loan is taken out for the purpose of consolidating a number of outstanding loans.

Accessing Bad Debt Loans

Accessing bad debt loans is nowhere near as difficult as many people believe. In fact some would argue that the process is easier when compared to other types of loans. The information these institutions require is usually very basic, and their requirements are quite easily met. Besides proof of name and permanent address you may be asked to provide evidence of age. You could also be called upon to show that you are employed, and have continuously been for a period of time. The question of whether or not you have a checking account may also arise. The requirements will generally vary among the lending institutions. A boon for borrowers in today’s dispensation is that in some circumstances this can all be done online, and approval granted in as little as 24 hours.

Notwithstanding the uncomplimentary name bad debt, these loans do fulfill a useful function. So much so that we now see where big names in the financial world are getting in on the act as they seek to tap and exploit this niche. Of course not everyone will have cause to access these type of loans, but for those who do they can rest assured that taking out a bad debt loan is not necessarily a bad thing.

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