Is A Bad Credit Cash Loan A Good Idea?
May 30th, 2009, Written By: Kerri Randall
If you’re in debt, the future may seem bleak. You might have more money going out than you have coming in, making it difficult to pay your bills or build up any kind of savings. As a result, you continue to sink deeper into debt, damage your credit, and place yourself at risk for collections or bankruptcy. When you already have bad credit, this is a tough situation to get out of. Bad credit cash loans can be a temporary help.
One option is a payday advance loan. This can be helpful when you have an unexpected emergency or a bill that is due but you’re low on funds and won’t receive your next paycheck until it’s too late. The advantage is that you can have the funds available to you quickly, usually in less than a day. You are easily approved because the lender does not run a credit check. Not only will an inquiry not appear on your credit report, but if you can pay the loan back on time, it can help begin to improve your credit. Your only requirements are generally to provide proof of employment and usually pay a small fee. The fee amount will vary, but most tend to average $20 or less.
You can get into trouble, though, if you are unable to pay the loan back on time. Usually, the time frame is only a couple of weeks. Since it is a “payday” loan, you are expected to repay in full from your next payroll check. If you can’t do so, your interest rate could be 36-40%, and suddenly your problems are worse than before. Your loan may have been relatively small (most payday loans top out around $1,000), but you now could have to resort to another loan to pay this one off, as most payday borrowers do. It’s a vicious cycle that you must be careful not to start.
Your other option for a bad credit cash loan is a secured loan. You may be able to qualify for an unsecured loan with bad credit, but it will come with a high interest rate. An unsecured loan will have a lower interest rate, but the downside is that you must provide collateral, any properties or assets that you can offer the lender as security for their investment. You’ll have a longer period of time to pay back the loan, but if you are unsuccessful, your credit can be severely damaged and the bank will claim whatever you put on the line for collateral. If you put down your home, for example, and default on the loan, you’ve now risked a serious loss.
Bad credit loans can help you. The information here should not scare you but rather show you the very real risks. If you use these loans, they are best considered as a temporary fix to avoid late fees, missed payments, and collections, or as an initial step in your get-out-of-debt plan.
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Categories: Money Resources
