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Is Guaranteed Approval A Real Thing?

Banks, credit unions, and other kinds of traditional financial lenders are not going to approve the loan applications of people with credit score of less than 630. In fact, if people with bad credit do apply to such institutions for loans, then the credit check done by them will further damage the credit score.

Unfortunately, the vast majority of Americans have a bad credit score. Hence, whenever they need a loan, they opt for lenders who do not need a good credit score. Getting a bad credit loan is the ideal deal for such borrowers.

Guaranteed Approval

It is important to note that there are many lenders who advertise that they offer guaranteed approval for bad credit loans. Borrowers need to avoid such lenders as the advertisements are misleading and they are just predatory lenders. This is because if such lenders offer guaranteed loans irrespective of how bad the financial situation of a borrower is, then the lenders would quickly accumulate a whole load of bad loans and be soon out of business.

All lenders, including those that offer overnight loans and those that offer guaranteed approval, have certain eligibility criteria on the basis of which they disburse loans with no credit check. Some of these criteria are a regular paycheck and a bank account. The lenders will take a post-dated check from the borrower (which is used as collateral) before approving the bad credit loan. Thus, if you do not have a bank account and/or are not employed, then you will not get the loan.

What are guaranteed approval loans?

Bad credit loan lenders advertise 'guaranteed approval' of loans so as to reel in naive borrowers. It is a predatory practice followed by lenders to grab your attention. It will make you click on their online advertisement or walk into their office for a loan with no credit check. This click-bait like tactic is used by the predatory lenders to get potential customers into their door.

Lenders who advertise 'guaranteed approval' are aware of the fact that most of the potential borrowers are financially illiterate, have low credit, and desperately require some funds. They are also aware of the fact that once such customers enter their website or office, they are more likely to take the loan.

In most cases, if you meet the minimal criteria, the loan will be approved by the lenders despite your lack of ability to repay. Such lenders really do not care whether or not you can repay the loan on time. Their main motive is to ensure that you keep using their products and fall into a debt trap.

Predatory 'guaranteed approval' lenders want the borrowers to roll over the debt when they are unable to repay. Or, they want the borrowers to repay and then immediately take out another loan, a process referred to as "re-borrowing". This ensures that the lenders keep making money off you via high interest rates, fees, penalties, and other charges. And because borrowers keep depleting their cash by paying excess money as interest each time, they end up taking out new loans from the lenders, thus falling into a dangerous debt trap.

It is best to avoid predatory bad credit loan lenders with guaranteed approval as there is no such thing as guaranteed approval!