Bad credit rating is usually a disqualifying factor when applying for a loan. With credit score way less than perfect, chances of getting a loan verge almost on impossible. Not only is it hard to get approved for a loan with bad credit, but the loan itself is very costly once the lender is found. If you need a loan but you have bad credit, you must be cautious because it’s extremely easy to get yourself into expensive loan trap.
If you’re looking for a loan with poor credit and have little time to spare, you may consider taking up a payday loan, sometimes referred to as cash advance loan. However, you must use payday loans wisely because they are very expensive and rendered for a short period of time, most often two-week period. Cash advance loans are based on the borrower’s personal check kept for future deposit. They might also be based on electronic access to the borrower’s bank account. When the first method is preferred, the check is written on the amount borrowed plus the finance charge and the borrower receives cash. In case the second method is chosen, the borrower signs over electronic access to his bank account in order to receive and repay the loan. The checks are held by lenders until the loan and finance charges are due. The borrower has several ways to pay the loan. He can wait for the check to be deposited in the bank, he can redeem the check by paying with cash, or he can pay only the finance charge and roll the loan over.
What Are Bad Credit Payday Loans?
Bad credit payday loans are small-dollar loans. Depending on state, one can borrow from $100 to $1000, in some cases more. They are short-term loans since the usual loan period is two weeks (the borrower’s following payday). Cash advances are also expensive.
The Problem of High Interest
The main thing that you have to worry about when it comes to a quick cash advance loan is the high interest that you will have to pay. It can be a real burden once the payment time starts because it is a lot higher than normal interest. Frequently, they cost 400% or more in APR. Also the finance charges are costly since they range from $15 to $30 of each $100 borrowed. The finance charges for a two-week bad credit payday loan make the interest rates as high as 390-780% APR. The shorter the loan period, the higher the APR is. All in all, payday cash advance loans are very expensive when compared to other loans. This is why it is extremely important to think twice before getting a payday loan for bad credit. Perhaps there are different kind of solutions to your financial problems, for instance peer-to-peer loan or a salary advance from employer.« Weekend payday loans | Faxless payday loans for bad credit »