Bad Credit Loans: What Are They?
Sometimes people run into financial troubles. Regardless of how hard they try to stay afloat, they wind up deep in debt with accounts in default and past due. Once a person gets to this level, they often wonder what they can do if something happens to where they would need money fast. This is where the bad credit loans come into place. There are a few different options for these loans, and each has its pros and cons. The first type of loan to consider when looking for a loan that is available to someone with bad credit is a payday advance loan. These loans are usually issued for between $100 and $500 dollars, but at times can be up to $1000. They have a short pay back term, usually between 10-15 days, but at times up to 30 days. They require the borrower to have a bank account, and to have a job with verifiable income. At the end of the term, the lender requires the borrower to pay back the loan plus their handler fees either with cash, or with a check that was left as collateral at the time the loan was issued. They can be rolled over for longer terms, but each time it incurs another fee. This loan type is good for a short-term loan, which can easily be paid back within the grace period. The cons is that the fees and interest can often amount to three hundred percent or more on these loans, and if they are rolled over multiple times, the fees can actually cost more than the loan itself, with none of the payment going to the principal. Another type of loan to consider is the assortment of high-risk loan business on the internet. These companies offer loans to people with bad or no credit, as long as they meet criteria such as having a job for more than 6 months, having a home phone, and being at the current residence for more than a year. These businesses can be either good or bad, so research needs to be done before committing to any company offering money over the internet. The interest rates for these types of loans are higher than what you would get from a traditional lender, sometimes much higher. Another thing to consider is the length for the loan. The interest and fee payments for a short-term loan can cause the APR for the loan to be very high, though not quite as bad as the payday loans. Banks and other lenders offer these types of loans, and they can go towards building your credit report back up. Research is warranted in obtaining bad credit loans, be it from a local bank or a company online. Make sure you know all the details before signing a loan, to keep from being burned down the road.