Individuals with poor credit rating find it immensely difficult to acquire a loan when needed. It could be a task to reach a lender who could be the cheapest in order to fulfill the requirement given the circumstances.
What is a Bad Credit Payday loan?
The payday loan can be defined as unsecured short-term loans which are at times also referred to as an advance payday. It could be understood as ‘any individual above or at the age 18 years or older and is a UK origin with a stable income is eligible to apply for the online payday loan’.
This, further, can be explained as a bad credit payday loan which is a small and short duration loan planned to help clients to overcome unforeseen circumstances on the financial front (if any).
For people with poor or bad credit rating, a payday loan can have different interest rates depending upon the lender’s decision. The APR on such short-term loans can easily range between 400 to 1000 percent (according to studies, in 2002).
Are Payday Loans a Trustworthy option?
These payday loans are, usually, offered by stand-alone companies or pawn shops. The process through which the loans are dispersed is also not in line with the conventional practices. Even though, these loan schemes are a bit mischievous in nature, past studies have revealed that back in the year 2004, the estimated payday lending for financial charges amounted to an overwhelming $6 billion (source, USA Today, 2004).
Though It is important that one always should borrow well within ones. Means and also be prepared to repay the loan obligation on time.
A bad credit will affects the future loans procurement for an individual.
Bad Credit in general is the term being used to explain the financial condition of a person or an individual who has been having a record of poor management of financial affairs or circumstances.
A bad credit situation is one of the important reasons. A person or borrower would find it extremely difficult to get a loan or finance. This is clearly an indication that such a borrower could be riskier.
Alternatives to Bad-credit Payday loans.
Since the orchestrated impact of payday loans are quite alarming in nature. One must identify options to avoid any indulgence to such loan schemes. Opt for alternatives for solution to their financial obligations.
- Installment loans as an option. These type of loans are a viable option to procure finances for both a long-term and large loan amount. One can easily apply for a personal installment loan. Towards the desired amount and choose a pay-off period of up to 6 years.
- Credit cards as short-term loan repayment option. Credit cards, when used wisely, can come to one’s rescue in the most caught-up situations. If the loan amount is small, one can easily leverage the benefits of a credit card to pay off the loan.
- Using Your Home’s Equity to pay debts. A house is an asset, if it is used wisely. Using an opportunity to pay-off a debt instead of falling prey to lenders. Luring you with a payday loan scheme, is a viable option.
Based on the above analysis, it is mandatory that any kind of personal borrowing must be permitted. Also issued by a direct lender who is authorized by FCA. In such a situation a product for bad credit loan also is in a similar scenario.