Personal loans for bad credit: why payday loans are a viable option
The task of finding the funds needed to help solve financial problems is complicated by the fact that some lenders still closely scrutinize credit histories. This is not good when the situation is an emergency, as far as personal loans for bad credit go, a payday loan is not a bad option.
There are great advantages to fast loan approval and quick access to the required cash, but it is important that the consequences of all loan agreements are known before signing any contract. All personal loans have terms and conditions that affect the affordability of the loan, so it is essential that the terms of a payday loan are carefully considered.
What are payday loans?
As the name suggests, a payday loan is an unsecured loan that is given on the back of an upcoming paycheck. This means that the loan is paid back in one lump sum on the next payday. This may seem like an ideal solution for getting bad credit personal loans, and they certainly come in handy. But there are conditions that must be taken into account before applying.
On the plus side, because these loans are approved with your paycheck in mind, lenders aren’t interested in your credit history. This means that if an applicant has a bad or terrible credit score, he can still get the loan if his income is sufficient. What’s more, fast loan approval is ensured because no time is wasted checking credit history.
However, the loan limit is small, usually no more than $1,500, and the interest rate is very high. Coupled with the fact that this personal loan must be paid back in 30 days, it means that a payday loan can be very expensive.
How to make a payday loan work
So if it’s so expensive, what good is a payday loan? Well, they are particularly useful in financial emergencies, when raising quick money is more important than the amount of interest paid. In that way, it is a perfect personal loan for bad credit management, with small debts paid off one at a time. The only problem is the repayment of the loan.
Due to the fast loan approval service offered, an applicant can get the green light within an hour and have the cash deposited into their bank account at the end of the day. It means that within 24 hours all the problem can be dealt with. Therefore, a final notice about an outstanding mortgage payment or credit card debt can be served.
The essential thing is that the personal loan is less than the income due to arrive. A $1,500 loan at 30% interest requires a one-time payment of $1,950, which will be withdrawn directly from the bank account. However, if the paycheck is only $2,500, this creates a significant problem in meeting overall monthly obligations.
Find the right lender
The best place to find payday loan providers is online. This is because the lenders are experts in providing personal loans for bad credit management, offering the lowest interest rates on the market and the best payment terms. However, always be sure to check the reputation of online lenders with the Better Business Bureau website before agreeing to anything.
While quick loan approval is a big plus, and no credit check approval process, the most important details are in the fine print. A payday loan is expensive, but missing that one-time payment will have serious consequences. It may be worth exploring other personal loan options to find the most suitable loan offer.