How to Get an Urgent Loan for CIBIL Defaulters? A Complete Guide

Financial crises are a part of life whether we want it or not. At the time of the financial crisis, loans serve us as the ultimate source of light. However, getting a loan with a low credit score is quite difficult. It is almost impossible for Cibil defaulters to get loans from banks.

But don’t be worried because some methods can help you to get urgent loans. To know these methods of getting an urgent loan for Cibil Defaulters read until the end.

What are CIBIL Defaulters?

Cibil Defaulters is a term used for a company or individual with a CIBIL score lower than 600. Apart from the low CIBIL score they have a payment history that includes delayed payment, not paying acquired loans, pending credit dues etc.

Characteristics of CIBIL Defaulters

• Missed Payments: If borrowers do not repay the loan on time or have pending credit card dues, they come under the category of CIBIL Defaulters.
• Poor Credit Score: An individual with a credit score lower than 600 is considered a CIBIL Defaulter. Banks generally refuse to provide loans to candidates with poor or low credit Cibil scores.
• Difficulty in obtaining Credit: Commonly financial institutions and banks view defaulters as high-risk borrowers making it harder to secure loans or credit facilities.

Methods To Get Urgent Loan For Cibil Defaulters

Getting a loan as a CIBIL defaulter is challenging, but still some options are available. Here is how you can secure a loan for low Cibil score.

• Search Lenders Who Offer Loan On Low Credit Scores

NBFCs and private lenders offer loans to people with low credit scores. However, it is important to know that they have high interest rates. These loans are less favourable to the borrowers.

• Opt for Secured Loans

Borrowers who can provide collateral like property or gold have more chances to get a loan. Lenders approve secured loans easily to defaulters because the risk is low in secured loans.

• Get A Co-Signer or Co-Applicant

If you have someone with a high CIBIL Score who is ready to help you as a guarantor, you might get an urgent loan. Because borrower applications with a good guarantor are approved smoothly as compared to applicants with no guarantor.

• Apply for Small Amounts of Loans

If you apply for Small Amount of Loan with low credit scores, you have a high chance of getting approval. Because Small Amounts of Loans are associated with a low risk of financial losses and recovery.

• P2P Lending Platforms

Peer-to-peer lending platforms connect borrowers directly to directors. But usually, they demand a high rate of interest which is difficult to pay.

• Improve Your CIBIL Score

It is good practice to clear all your dues and delayed payments before applying for any loan. It will improve your CIBIL score and increase the chances of loan approval. You can check your credit score on tools like CIBIL Credit Report API to know where you stand.

Important Points To Know Before applying for a loan

• High interest rates: Getting a loan for a low CIBIL score usually comes with higher interest rates.
• Be aware of fraudulent lenders: stay away from fraudulent lenders who promise easy loans. Because they can misuse your documents and can use illicit means to harass you to obtain high interest.

Eligibility Requirements for Personal Loan Without CIBIL Score

If you are seeking a loan for a low Cibil score, you must fill out these eligibility criteria.

• Borrower must cross the age limit of 21.
• The borrower must earn rupees 15,000 or more than that.
• The salary or earnings of a borrower should be directly credited to the applicant’s bank account.
• Applicants should have a credit score above 600.

Important Document Required For Loan Application

• ID cards or Identity Proofs: this includes officially valid documents like PAN Card, Aadhaar Card, Voter ID card, Passport, Driving License etc.
• Business Proof: Appointment letter, Labour Identity Card, Job Contract, GST Registration and Filing Documents, Partnership deep, Shop Act license, etc.
• Income Proof: Salary slip, Form 16, Bank Account statement, Copy of Pension, Previous year ITR Employment, MOA and AOA.
• Address Proof: Aadhaar Card, Driving License, Voter ID Card, Passport, Utility Bills, Ration Card, etc.

Challenges A Cibil Defaulter Faces To Get A Loan

Cibil defaulters face many issues when trying to get loans. Here are the most common challenges a defaulter faces while applying for an urgent loan for Cibil Defaulters.

• Strict Loan Terms

Usually, Banks do not provide loans to individuals who have low credit scores. Which makes borrowers opt for other lending options. But these lending options have strict terms and conditions like shorter repayment periods, smaller loan amounts, etc.

• Higher Interest Rates

Lenders charge higher interest rates to individuals who have low credit scores because they don’t have other options. For example, interest rates of 12% to 18% or more than that, and needy borrowers take it because they do not have other options.

• Limited Lender Options

Banks refuse to approve loans to people with low credit scores, it forces defaulters to reach other lenders with less favorable terms. Borrowers either get a loan from the private lender or the lending platforms.

• Collateral Requirements

Normally individuals with low CIBIL scores belong to lower-middle or poor families. To get surety of no financial loss lenders ask for collateral like gold, vehicle, property etc. But many people belonging to the lower middle class and poor families still don’t have assets like gold and a vehicle which makes it difficult for a CIBIL defaulter to get a loan.

FAQs

1. Can I Get A Loan With A 550 Cibil Score?

Usually, an individual with a 600+ CIBIL score is eligible to apply for the loan. It is difficult to get a loan with a 550 Cibil Score.

2. How Can I Get An Urgent Loan With A Low Cibil Score?

You have the following ways to get an urgent loan for Cibil Defaulters.

• Search lenders who offer personal loan without Cibil score.
• Opt for a secured loan
• P2P lending platform
• Apply for smaller  loans
• Apply for Smaller Loans
• Get A Co-Signer or Co-Applicant

3. Can Loan Defaulters Go To Jail?

No, loan defaulters cannot be jailed just because they are unable to pay loans. It is a Civil matter not a criminal. However, lenders can take legal action like seizing collateral or filing a case against the borrower for loan recovery.

4. Can A Defaulter In Cibil Get A Loan?

Generally, getting an urgent loan for Cibil defaulters is not easy. However, borrowers can opt for P2P lending platforms and private lenders who offer personal loans without a Cibil score.