If you’re in dire need of cash, a payday loan can be a super-quick solution to help you pay off bills and other debts. For those with less-than-stellar credit, bad payday loans might be the only thing readily available.
Before you commit, read on to learn more about the many pros and cons of choosing a bad credit payday loan.
Quick and Convenient
In most cases, you should be able to get bad credit payday loans within 24 hours or even less. This includes everything from the time of application all the way to approval and giving you a check or doing an account transfer.
With these types of loans, you won’t need to worry about your credit score. Since the loans are unsecured, you should be approved, even if your credit is extremely low or nonexistent.
Today’s payday loans are more convenient than ever before thanks to the availability of online applications. Simply find a lender you like, log on, and start the application process.
Most payday loan companies can tell you if you’re approved within a matter of minutes. This quick process can be a lifesaver, especially if you’re trying to pay an extremely late bill like your electric company or rent.
You could also be eligible for a direct deposit transfer which means your money will be in your bank account in just a few minutes. This makes getting the money you need extremely fast and easy.
Bad Credit Payday Loans Don’t Need Collateral
A secured loan often requires you to have some kind of collateral that can range from your vehicle to your home. With collateral, the lender can leverage their risk by using this collateral to recoup their losses if they need to.
Secured loans can be risky for the borrower since they could lose everything if they fail to repay the loan. With payday loans, you won’t need to worry about this issue.
A payday loan simply relies on your proof of income to determine a loan amount. Be sure to bring your paystubs or enter this information online so the lender can tell you how much money you’ll get.
The rate for these types of loans are higher, but there’s also no risk of losing your home, your vehicle, or other valuable assets. A title loan uses your title as collateral which means the lender could take it from you if you don’t repay the loan.
Make sure you read the fine print of any payday loan before you sign. This is the best way to ensure that you’re protected and you know exactly what your rates and fees will be ahead of time. If you get federal benefits, you may want to look into ssi loans if you don’t get a regular paycheck.
The Cons of Payday Loans
Bad credit payday loans are a quick solution for people who need money quickly in order to pay their bills or make rent. But there are a few disadvantages to these types of loans that everyone should be aware of.
First, most payday loans are extremely expensive in terms of interest rates and late fees. In fact, the average payday loan can have a rate of anywhere between 300 and 900 percent.
The reason these loans are able to charge such high interest is that they’re designed to be a short-term loan. If you don’t think you can pay the full balance quickly, you could end up paying quite a bit in interest over time.
These high rates can make it very difficult for some people to repay them fully and get out of them. Make sure that you’re only getting the loan for a short term need that can be paid back quickly.
Some consumers find themselves using payday loans on a regular basis. This can create even more debts and fees when you start to add them all together.
Avoid using a new payday loan to pay off an existing one. This can lead to serious debt and it may be impossible to recover if you’re not careful.
Make sure your payday lender does not sign you up for direct debit for payments. If they do, they could take your entire paycheck, leaving you with no money left for expenses like food and gas.
A direct debit repayment can be convenient for some people, but payday lenders tend to take the maximum amount they can all at once. And, even if you already have bad credit, failing to pay your payday loan back can cause your scores to dive even further.
Look for other ways you can get money to pay emergency bills whenever possible to help you avoid exorbitant interest rates and fees. A payday loan is a great way to get access to fast cash, but it’s only recommended for borrowers who know they can pay it all back fast.
The Bottom Line
For those who need money in a hurry, bad credit payday loans can be a quick fix and a solution to several financial problems. It’s important to understand the many pros and cons of these types of loans before you commit.
Read all terms and conditions before choosing a lender, and make sure you’ll be able to pay the loan back as quickly as possible. Don’t sign up for direct debit payments, and make sure there is no collateral required to get the loan.
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