Expenses sometimes crop up without any notice. In such situations, money lenders come as saviors. The loan industry has seen a bonanza of new lenders offering cash advances on salaries to tie customers over until pay day. Pay day lenders have developed in response to rising prices and low wages. In theory, the ability to borrow money to get through the rest of the month is a good thing. The problem is, while they will almost always lend to those with a bad credit history – borrowing from this type of lender comes at a cost. Some payday lenders charge APR rates of over 4000%, a sum which would have made most people running for the exit.
However, those with a poor credit history can find it very hard to get credit anywhere else, and so pay day lenders are often able to justify their costs with the risks they are taking on lending. This is not a happy situation for anyone with bad credit. So, you should start looking for other options beside payday loans such as short-term loans, which offer the benefits discussed in details below. Check it out.
Bad Credit Loans
Many payday lenders argue that because their high APR rates are calculated on yearly basis, that it doesn’t represent their true (cheaper) cost . This is true, but ideally, taking out a short term loan shouldn’t be prohibitively expensive. Explaining compound interest rates can be seriously complicated, but very simply, payday lenders often allow you to extend your loan – and then charge you interest on the interest! This is how a small debt can very quickly become a huge debt. So it’s really important to find a short term lender who is offering an ethical and clear service, without piling on unfair costs and charges.
Transparent and Honest
The best short term lenders, then, are open and transparent about what they charge, how they work and who they are. It also plays a crucial role in boosting your credit card score. By opting for installment loans, you can increase the score of your credit card by adding details of what type of account you have and many such information. Once your credit card score is raised, you can apply for a new loan. Moreover, you’ll get this new loan at a lower interest rate than the previous one.
No hidden fees or charges
Payday lenders will often charge for late payment letters, fees for defaulting on payments, and for rolling-over the debt. A good short term lender won’t include these hidden charges. To help you save money on interest, they will inform you the exact amount you need to pay, making sure that it will not going to increase in the near future. That’s why, most people while hunting for other options beside payday loans, choose short-term lenders.
A Low APR
Finding a loan with a reasonable APR rate might be a challenge, but it’s not impossible. The APR varies from one lender to another. Moreover, it also depends on the state you’re living. Generally, the APR rate is much lower for short-term loans in comparison with payday loans. You can use a loan comparison site to find a better deal.
Payday lenders are often accused of encouraging customers to take out another, even larger loan after repaying the first. Taking out a loan is a personal choice, and so any company that pushes you to borrow should be avoided. On the contrary, there’s no pushy sales in case you’re seeking a short-term loan.
Some payday lenders do not even have a phone number. So if things go wrong or you’re having trouble paying it is impossible to even negotiate. Always make sure there is a contact name or phone number for complaints. However, this is not the problem with short-term lenders. You can easily contact them and place your complaint.
For getting financial help instantly, no other option is as great as short-term loans. These lenders ensure fast funding and no credit score is required to be eligible for the loan. Moreover, to apply for this loan, you won’t have to show your property as collateral.
The Bottom Line
It’s tough to calculate where your financial amount will stand to in the near future. No one can predict the condition of economy in the next 30 to 40 years. When you’re taking a long-term loan, you’re bound to pay off the taken amount as installments in the future, irrespective of your financial status. Oppositely, for a short-term loan, you can easily calculate the budget you need to repay the loan.