It is true that having bad credit ratings to your name used to kill off the chances of getting a meaningful cash loan with good terms. The idea was that bad credit meant poor money management, so lenders were not willing to trust them. But the economic crisis of a few years ago has changed matters, and these days it is possible to get $5,000 personal loans with bad credit.

The trick to this miracle is partly that lenders are more aware of exactly what a low credit score means, and partly down to the growth of the online lending industry. And, in many cases, the benefits of fast loan approval, competitive interest rates and flexible repayment schedules are available to bad credit borrowers as well as good credit borrowers.

When it comes down to it, lenders really only need to feel assured that repayments on personal loans (and all loans) they approve will be received without hitch. Instilling this confidence is easily done when the right information is provided.

Securing Approval

Getting the green light on $5,000 personal loans with bad credit is not that difficult. Why? Well, there are several simple steps to providing the required positive impression to convince lenders their investment is safe. Not least, assuring them that the borrower is mature in their attitude towards taking on the new debt.

For a start, the sum of money being sought is not that high, but is a realistic amount that should be affordable to everyone. This is one of the biggest positive impressions, as it shows the applicant is keeping a careful eye on what is affordable. With such an impression comes lender confidence and the potential for fast loan approval.

Another key to providing a positive impression is in having a reliable source of income and a low debt-to-income ratio. The income shows there is an ability to meet repayments, while the ratio indicates how affordable of the personal loan is. If there is insufficient excess income to meet the payments, then the loan will be rejected.

Selecting the Right Terms

If the wrong decisions are made when selecting loan terms, rejection is almost certain. For example, when seeking $5,000 personal loans with bad credit, the need to prove an ability to repay the loan on time is all-important. A key to doing this is to keep the monthly repayments to the minimum.

An effective way of lowering the monthly repayment is to lengthen the term of the loan. For example, repayments on a $5,000 loan over 3 years can be $150. That is low, but over 5 years the repayments would be just under $100, which is much more affordable and encourages fast loan approval.

Clearly, this is a highly effective strategy when larger sums are being sought. However, the downside is that the amount of interest paid by the borrower is more because the lifetime of the personal loan is greater.

Other Steps to Consider

As with all loan applications, approval cannot be hoped for if the basic criteria are not met. Applicants for a $5,000 personal loans, with bad credit or not, must be over the age of 18. He or she must also be a citizen of the US, have a reliable source of income and must have an active bank account. Only when these are confirmed can the application be properly considered.

Reducing your credit score can also make a very positive impression, but it also reduces the interest rate to be charged on the loan and makes fast loan approval possible. This can be accomplished by taking out a series of small payday loans and using them to clear particular debts. However, in the case of a small personal loan (like $5,000) this might not be necessary.