Bad Credit Payday Loan
If you don’t have a good credit history and your record shows that you have non-payment entries on your previous loans or a record in a claim court, you turn into a borrower with a bad credit. So, when you request for a loan application, your case is what is known as a bad credit payday loan.
For big institutions like banks, approving your loan is a risky investment, and knowing your credit history, you’re most likely to fail in meeting your due date or even making defaulted payments. They usually turn down people’s loan applications when they have bad credit history. For your loan to be approved, you need to convince them that you can make your payments on time. But most of the time, even this will not do the trick.
However, you can still secure a bad credit payday loan from other institutions that are not as strict as banks when it comes to their basic requirements. But payday loan companies impose much higher interests than those given by banks. You also have to give a kind of collateral, like a post-dated check, as an assurance that you’re going to pay the money back on time.
After you complete the application process, the loan company will have to do a background check to verify what you have stated in your application, like your employment status and an active bank account. The amount you can secure depends on your monthly income and your standing with the company, if you have been approved for a loan before.
The repayment process that comes with your bad credit payday loan may depend on the amount of money that has been awarded to you. You can choose to pay the loan in one instalment before the given due date or you can choose to make staggered payments throughout the duration of your loan.
The post-dated check you have issued becomes a guarantee that you’re going to try to make the promised repayment. You can also pay in cash so the lender won’t have to use the post-dated check for your supposed repayment.
As in traditional financing, there are risks involve in securing a bad credit payday loan. If you fail to pay before or on the due date, your loan provider will cash out the post-dated check you issued, anyway. If your account doesn’t have sufficient funds to cover the amounts on the checks, the lender holds the right to recover the check fees or the loan amount with its interest in claim courts.
When this happens, it’s not only the loan company that you have to deal with. Your bank maybe forced to close your account as you become a delinquent customer and doing business with them in the future might prove to be extremely difficult.
Bad credit payday loan may seem like a very attractive opportunity for those who are in need of cash urgently to answer to an emergency. However, experts have already proclaimed that it should only be used as a short-term solution and not as a means to fulfil your financial goals. Federal and state laws even agree that payday loan companies prey on the frantic financial needs of their clients.
But, there are people who have found payday loan to be extremely beneficial especially if they have to use the money right away. Usually, the amount involve is very small and is easy to return to the lender. Therefore, borrowers are cautioned to be very careful and be responsible when borrowing money from these institutions.