How Efficient Are Small Cash Loans With Bad Credit Scores?

17. February 2017 Finance 0
How Efficient Are Small Cash Loans With Bad Credit Scores?

Despite best efforts, everyone has months where you just can’t seem to make the ends meet. You are falling behind on rent, or school fees or your mortgage and there is just no way tide this over till you get the next paycheck. A small loan at such a time is usually the only option. However for many of us, even that avenue of hope is closed when you have a bad credit score.

Luckily, the interest provides a simple way out of this conundrum – using quick cash loans online.

What are quick cash loans?

Quick cash loans, or payday loans are loans of small sums that can be availed online. It is a relatively young industry. The first companies issuing these loans emerged back in the ‘90s. It consists of money lenders approving relatively small amounts of money as loan for a short time period. The loan is issued without any collateral and is provided to the borrower with minimum fuss. Cursory background checks are carried out to determine if the borrower can pay back the money eventually, but in general, they are a far cry from the lengthy process that one must undergo.

How does loan with a bad credit work?

A bad credit history would usually mean that you will be turned away from most financial institutions. While there are ways to improve your credit history, those take time and money, which you don’t currently have. Quick cash loans however, do not check your credit file. Instead, they judge your ability to repay the loan based on your current financial situations. You will be asked to provide read-only access to your bank statements and also current income, either from your job or other sources such as Government benefits or pension plans.

If your current fiscal situation is secure, your loan will be approved irrespective of what your previous behavior may have been in regards to loan repayment. Usually, online firms will take a few hours to review your application and a deposit will be made to your account by the end of the day.

However, since quick cash loans are so easy to get, there a few pit falls a lot of people forget about. Some essential tips to keep in mind while applying for this type of loan are:

Don’t apply for a loan you can’t afford

While you might be in a tight spot, it’s not a good idea to always apply for loans to ease the way. Quick cash loans have a high APR which means that you would have to payback a sum considerably more than what you borrowed. If you can’t afford to pay it back, you may be liable for fines.

Avoid multiple applications

Even though these loans don’t check your credit history, they still affect your credit rating. Applying for multiple small loans too close to each other would further worsen your credit score. Thus, when you need a large loan, there will be tremendous negative repercussions.

Be wary of hidden fees

32 out of 50 US states have no cap on APR for payday loans. Thus you should research the firm of your choice closely to make sure there aren’t additional charges you are missing.

Consider if you really need the loan

Even though there is no collateral, a lender can still sue you if you fail to repay a loan. Before signing the agreement be very sure if you want the loan. There will no avenue to regret.

If you have considered all things, quick cash loans are an easy fix to bad credit scores. They are fast, easy and have a low rate of rejections. If you are in a fix and have no way out, these loans will be your savior in a heartbeat.