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Unsecured Loans for Bad Credit Improve Your Credit Score
Being in a bad credit when you are in need of cash or loans can really be hard especially because lenders will not want to risk on you. With such a record they are not sure if you can pay back for the loan or not. Nevertheless, there is an option in unsecured loans for bad credit where you do not have to risk any property for collateral though the interest rate can be a little higher. Besides, these are the most popular kind of loans for those with bad credits.
Unsecured Loans for Bad Credit, as the name denotes, is meant for those with bad credit record and in need of some financial support. It is also designed for those with bad credit and cannot pledge their homes or properties as collateral but is in need of cash to bail them out. With these loans the borrowers have the full liberty of the use of the cash without any interference of lenders. Hence, the borrowers can use the money to renovate their homes, consolidate their debts, pay bills, take a holiday, etc.
Under the unsecured loans for bad credit the borrower can avail a good amount of cash depending on his needs and capability to pay back. However, most often the amount ranges from £ 5000 – £ 25, 000. Being an unsecured format and no collateral involved, the interest rates and the APR are often a little higher than the secured loans. But with the easy monthly instalment attached them for a period of 1-10 years, paying back for the unsecured loans for bad credit should not really be a problem.
There are also a high number of lenders going in for offering unsecured loans for bad credit due to the ever growing need for such loans. Note also that these are personal loans specially designed for individuals with bad credit and the money will help them resolve their financial problems.
The arrival of the internet has also made the application for such loans much easier. As no paperwork is involved the application is easy, simple and swift while the approval is equally the same. The profit from unsecured loans for bad credit is tremendous.
Why not to use a Payday Loan to pay for a Vacation
We all run into those financial emergencies at one point in our life. Some people have money saved for these occasions, others use credit cards, and others again use a payday loan to fill the financial gap for the 15 to 30 days where we need the cash. This is what a payday loan is for. Be able to make it to the next paycheck. Pay for the car repair because without a car you will be out of work soon. Situations like this are where the payday loan does its duty.
However, some payday loan lenders advertise their loans to be used for normal consumer needs. Needs? Well, not really. These lenders play with your desire for having a new TV, a new iPhone or iPod, or to go on vacation. Sure, we all like to treat us to those nice things in life, but we need to be able to pay for it and not necessarily to buy these items on credit. Especially, not to buy these items on very expensive credit.
While this article is mainly written with the payday loan situation in mind, it also applies to using a credit card to pay for these items. In both cases you put a consumer purchase onto a very expensive credit account. The initial interest fee on the credit card might be lower, but statistics show that consumers easily need 18-24 months to fully pay off their purchase. That is very expensive at 18%-27% if you ask me. A payday loan is even more expensive, but it forces the customer to re-pay the loan much faster, which is a good thing. The initial interest rate for this type of loan is higher, but the time between when the loan is taken out and when it is paid back is much shorter.
So, while these are the basics the real story is that both types of loans are not designed to be used for normal consumer purchases. We all have seen what the last recession has done to consumers who were in debt way over their head. The number of foreclosures and bankruptcy filings has sky-rocketed. While some blame goes out to the banks and mortgage companies, a lot of blame has to go to those consumers who financed non-critical purchases with very expensive loan type. Everything is good while you have a job, but when the money gets tight these loans are going to destroy your financial status.
Conclusion: Payday loans are a financial product that is designed to be used in a financial emergency. It is expensive, but payday loans are granted faster than a normal bank loan + they do not affect your normal credit history. A fast payday loan is not to be used for normal consumer purchases for gadgets, TVs, iPhones, or cars. Used with the proper understanding of how these loan work is essential to your financial well being.