Small loans with bad credit are not impossible to obtain today as many banks and financial institutions offer bad credit loans and most are guaranteed to be approved. The internet is filled with offers of get $1500 fast, easy, no credit checks. All the small lenders make huge claims but read the fine print with a magnifying glass and you will see why they are in such a hurry to give money away so willingly even to people with bad credit.
There are Money Loan, Bad credit personal loans, Personal Loan, Loans after bankruptcy, Payday Loan, Unsecured Credit card loans, Bad Credit Mortgage, Home Equity Loan, Business Loan, Auto Loan, Debt Consolidation, Student Loan, Medical Loan and Mortgage Refinance. It can be very confusing to decide on which loan to apply for as there are bad offers amongst the good offers. Let us look at some of the risks involved in these small loans with bad credit offers.
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Personal Loans: Everybody experiences some financial difficulty especially in today's unstable economic climate. With the rate of unemployment changing peoples standard of living, having to work doubly hard to earn the equivalent of a just-making -it-income, and changing peoples shopping habits. A personal loan might seem like the answer but how do you choose the best rates, and the best deal amongst the hundreds on offer. You will need to do your homework here, compare the offers from the different financial institutions. This is vital for getting the best deal. Look past the flashy headlines. Lenders normally offer a flat rate to all customers, many of the lending companies use risk-based rates for bad credit loan. The rate in an advert will seem attractive now, but the projected risk will determine the rate in the end.
A longer payment term may be recommended to give you lower monthly payments. Some borrowers prefer this forgetting that more interest is charged on the loan over a longer period. The amount you require lending may have an effect on the rate of interest you will pay. The higher the amount of the loan is, the lower the interest rate charged. Loan companies use a layered structure, so the lower the loan the higher the interest rate. Borrowing $5000 can give you an interest rate repayment of only 7.9% but borrowing $4999 puts your bad credit personal loan into a lower tiered interest bracket where the interest can be 14.90% or higher. So ask about this before signing for a high interest loan.
Ask about the early repayment penalty. This is if you repay the personal loan back some time before the agreed end date. Also ask about what happens if you default on your personal loan, so read the contract carefully, and if you are unsure about anything, ask.
Payday Loans: These are normally small loans, to help from one payday to the next. The fees are dependent on the size of the loan, and on your credit rating. These are paid out within 24 hours and have to go into a bank account, or if you do not have a bank account then they are paid out in cash. The snag with this loan is that once your agreed time of payment is up the entire amount plus the service fee is deducted from your account, which leaves you short for the next month and so the cycle of borrowing begins again. That is the reason so many lenders take so long to get out of the debt trap. They borrow, have to pay back, which makes them short, so they have to borrow again.
These tips will at least help you to make an informed decision when taking out a small loan with bad credit or applying for a payday loan. So the smaller the loan, the more you pay, it might be in your best interests to apply for a higher loan over a longer term where the interest rate is lower. This decision is yours to make, but do ask questions and read the fine print.
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