Can CIBIL Defaulters Get Instant Loans?

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If one faces a financial crisis and needs some quick cash, instant loans are usually the best option. However, most loans, including personal loans, have certain eligibility criteria, the most important of which is the credit score. Therefore, it may be rather difficult to get a loan with a low credit score. However, it is not impossible. Thus, CIBIL defaulters can get instant loans if they know where to look and how to apply.

What Are CIBIL Defaulters?

Before we get into how CIBIL defaulters can get personal loans, let us first understand what the term CIBIL defaulters means.

CIBIL is the short form for the Credit Information Bureau (India) Limited, which is one of four organizations that keeps tabs on the credit information of individuals and businesses. Thus, they are authorized to give CIBIL scores or credit scores based on the credit information they collect, such as whether or not EMIs, bills, and so on are paid on time. This score usually ranges from 300 – 900.

Apart from defaulting on loans and other assets, the CIBIL score can also be adversely affected if multiple loans and credit cards are applied for at the same time. A CIBIL defaulter is, therefore, a person or business that engages in the above-mentioned activities and so has a very low CIBIL score (often below 600), though it is not an official term.

How To Apply For Instant Loans As A CIBIL Defaulter

There are several options that CIBIL defaulters can choose from to avail instant loans. Here are a few ways to apply:

  • Apply With A Co-applicant Or Guarantor: A co-applicant with a good credit score or a loan guarantor will reduce the risk of non-payment of EMIs. This, in turn, increases the chances of availing of a personal loan even with a low CIBIL score.

  • Get The Loan At Higher Interest Rates: If a borrower has a low CIBIL score, lenders aren’t likely to offer them instant loans very easily. However, certain lenders may offer such loans at higher interest rates to offset the risk. Thus, if one can afford the higher interest rates, they may be successful in availing a loan.

  • Have A Secure Income: A borrower’s income and its steadiness will be scrutinized before they can avail of a loan, especially if they have a poor CIBIL score. Therefore, the better and more steady the salary is, the higher their chances of getting a loan. Thus, people working with MNCs, PSUs (public sector undertakings), the government, or toprated private firms are more likely to get a loan.

  • Opt For Loans From NBFCs Or Fintech Lenders: Some Non-Banking Financial Companies (NBFCs) and fintech companies offer personal loans to people even with low CIBIL scores. However, these loans often come at very high-interest rates to avoid the risk.

  • Try Peer-to-peer Borrowing: If none of the available options work, the borrower can try going traditional and opt for peer-to-peer borrowing. This simply means that instead of borrowing a loan from a bank or another financial company, they can ask a friend or family member to offer them the loan.

  • Apply For Secured Loans: The loan option that banks and other financial companies are most likely to offer people with a poor CIBIL score is a secured loan. This means that the loan will be secured against some collateral, whether that is the house or some other asset. These loans have a lower credit risk for the lenders and so the CIBIL score will not matter as much.

The most common secured loan options for low-score applicants are as follows:

    • Loan Against Property: These loans use residential or commercial property as collateral. These loans are great for applicants who require a bigger loan amount and longer tenure.

    • Gold Loans: These loans are offered against the value of gold ornaments or coins. Lenders offering such loans don’t often look at the applicant’s CIBIL score at all.

    • Loans Against Securities: These loans use financial assets such as insurance policies, shares, mutual funds, fixed or recurring deposits, etc as collateral. The loan amount will depend on the LoanToValue ratios of the assets, which are set by the lenders.

  • Work On Improving CIBIL Score: Lastly, one should work on improving their CIBIL score. There are several ways to do this, such as:

  • Pay all the bills on time and in full. Don’t just pay the minimum balance as that can be detrimental to your CIBIL score in the long run.

  • Try not to use the full balance of your credit card. The optimal range is 30-50% according to experts.

  • Ensure that you have a balanced loan portfolio, which includes both secured (auto loans, home loans, etc) and unsecured loans (credit cards, personal loans, etc).

  • Monitor any loans that you’ve co-signed or been added as a guarantor on. Ideally, do not co-apply or be a guarantor for someone who cannot repay their loan.

  • Review credit scores and credit history to ensure that no discrepancies occur, and correct them if they do.

CIBIL scores or credit scores are critical in modern finance. They measure the overall creditworthiness of your customers. Therefore, having a low credit score can make them ineligible for certain financial benefits, like big loans. To be able to avail of those, they would have to improve their CIBIL scores by paying bills and EMIs on time and in full. However, CIBIL defaulters can still avail of secured loans and even personal loans from NBFCs and digital lenders, albeit at higher interest rates. As a loan agent, you have to research which lenders offer loans to those with poor CIBIL scores, confirm their eligibility criteria, collect and upload the documents required along with the online application, and then wait for confirmation. It is that easy, especially with a lender like Andromeda Loans that integrates its financial expertise with the latest trends to help customers find the best financial products suited to their needs. You can even partner with us to get the best deals for your customers!