Terms of a loan program might remain the same throughout the term period of the loan, except for ARM mortgage loans, but the financial status of the borrower would not be the same throughout their lifetime. Financial status might be affected by various factors such as economic conditions, pay grade of the person, employment status and other financial impact factors. These factors would prevent the borrower from making payments towards the monthly payments on the bad credit personal loan. A single default would cause a great damage to the credit score of the person.
A dent in the credit report would prevent the borrower from applying for future loan programs. It is because, defaults would stay on in the credit report for many years and this would be seen by the lenders during the application evaluation process and most of the lenders would not be ready to do business with this type of borrowers. In order to avoid these consequences, borrowers should make sure that they pay their debts on time. During a difficult financial situation it would be difficult for the person to repay their bills.
The best choice available to them at that point would be loan modifications. Modifications happen with the mutual consent of both the borrower and the lender. The first step towards the initiation of a loan modification should be taken by the borrower because they are the ones who would know whether they would be able to repay the personal loans no credit check or not. If they do face instances where their chances of paying the debts are unlikely, then they should immediately bring the issue to the notice of the lender.
Lenders would be ready to go for modifications if they find the borrower to be genuine. Thus, one should not contact the lender for loan modification simply because they want to buy an expensive gift for their loved ones very soon. Only serious financial situations would be considered by the lender. There are a lot of benefits of borrowers who opt for loan modification and those are listed as follows.
Merits of loan modification
- Borrowers who are unlikely to prevent a default would be able to manage the loan repayment using this method.
- Those who have gone jobless or are supposed to secure the job within a period of few months can contact the lender and postpone the repayment period. This would help them manage their finances during this phase and also need not worry about any defaults.
- Those who find their expenses to rise due to medical bills can contact the lender and ask for an interest rate reduction. A reduced interest rate would result in a decreased monthly payment than before. This would suit the borrower since they would be able to manage their debt payments and medical expenses.
Borrowers who want to extend or shorten the term period of the loan can contact the lender with their request. Shortening the term period would make higher monthly payment and this can be implemented by people who have got a better source of income.