Bad Credit Payday Loans?
Recently there have been some advertisements and online sites promoting bad credit Pay Day Loans. With the purpose of attracting customers with less than perfect credit, the use of the term bad credit next to any kind of loan product has become increasingly popular. However, in this case, are there really Bad Credit Payday Loans?
How Pay Day Loans work
When you and a lender agree on a pay day loan contract, the lender provides you with a small amount of money (usually less than 2000 dollars) that you’ll have to return in a small period of time. Due to certain features that we will explain later, this loans charge high interest rates. Up to this point we have: a small personal loan to be repaid in a small period of time.
This personal loan, as offered by certain lenders, can be repaid in installments over a longer repayment schedule. This possibility however, implies large amount of money in interests. You may be requested to reimburse the principal plus the same amount on interests in as little as six months.
Why do they charge such excessive interest rates? You may wonder if there isn’t a bit of greed involved and many wonder the same as you. What lenders state is that: since there is a lot of risk involved in these transactions, the risk must be compensated with high returns and thus, the interest rate charged for the money has to be high enough.
Are there Bad Credit Pay Day Loans Then?
There is a lot of risk for the lender because, in order to deliver the money fast (usually within 24 hs.) there are absolutely no credit checks. The lender won’t know then which is the borrower’s credit stance. This is often called blind lending. Since there are no credit requirements, this kind of loans are available for people with all kind of credit scores. Bad Credit, No Credit or Good Credit applicants can get a pay day loan without difficulties.
The only requirements for requesting a Pay Day loans are: showing proof of a steady job or other source of income and a bank account. Other than that, there are no loan requirements. Bad Credit Pay Day Loans do not exist as such. However, since there are some lenders that do not require the borrower to have a bank account, the use of the term “Bad Credit Pay Day Loans” often refers to the loans provided by such lenders. This is due to the fact that, the inability to possess a bank account is considered to be a sign of extremely bad credit or no credit at all.
So if you are in need of money fast and you don’t even have a bank account you can resort to those offering Bad Credit Pay Day Loans. Bear in mind though, that if regular pay day loans have rather disadvantageous terms, bad credit pay day loans can often be an excuse for charging abusive rates and fees or they may be even scams. So, you’d better do a thorough research and request loan quotes to compare rates before making a decision. There are many online sites offering a loan comparative which is a good place to start.
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ABOUT THE AUTHOR
Sarah Dinkins is a financial advisor who has been associated with Unsecured Personal Loans since long ago. She also holds a master degree in economics from Harvard University. To find Personal Loans, home loans with bad credit, bad credit loans, debt settlement programs, bad credit auto loans, visit http://www.badcreditfinancialexperts.com