Bad Credit Payday Loans
If you need some cash but have trouble getting a loan because of bad credit, trust me you are not alone. Each day, hundreds or perhaps thousands of people search the internet for immediate credit solutions specifically for people with bad credit history.
I was once one of those people, and I have never been so grateful to find payday loans to save my day! But before we get any further, you need to ask yourself first: “Can I afford to repay the loan in full and on time?”
If the answer is yes, then read on.
What you need to know about Bad Credit Payday Loans
Bad credit payday loans are small, short-term borrowings designed to meet urgent cash needs. They are one of the few financial products available to people with bad credit history. It is crucial though that you always borrow within your capacity and make repayments on time.
The interest rates on bad credit payday loans are usually much higher than the regular loans because of the risk involved. They differ from lender to lender, so as the representative APR.
However, the FCA caps on fees and charges always apply, which means you should never pay more than £24 per month for every £100 borrowed. You should not be paying more than double the original amount borrowed.
It is important to note though that not everyone who applies for a bad credit loan will get an approval. Payday loans can help people when other lenders may have turned them down because of their bad credit history. However, payday loan applications also go through an assessment and there are criteria to meet. You can find these loans from specialist lenders who look at more than just the credit history.
How did I get a bad credit?
Bad Credit is a term often used to describe the financial situation of people who have a poor or bad credit score. These people may have missed credit obligations such as a loan, utility bill, or credit card. It can also be the result of not having any credit history at all.
Essentially, if you have a bad credit score, you’ll find it difficult to get credit because you are considered a risk.
Benefits of Bad Credit Payday Loans
If you have bad credit and you cannot find help elsewhere, payday loans are available to your rescue.
The application process is non-intrusive and only a few personal details are needed from you. You don’t have to reveal much detail about why you need the money. You can also complete your application online.
Payday loans are unsecured loans, so you don’t worry about losing your property or any asset if you cannot pay them off in time. You’ll only be subject to further charges.
While with most personal loans you are tied into repayments for months and even years, with a payday loan your commitment will be over as soon as your next payday as long as you pay on time.
Since payday loans are for small amounts of money, you should not need to borrow more than you need, and they’re easy to pay.
Drawbacks of Bad Credit Payday Loans
With the idea that payday loans are available for people that might have applications rejected elsewhere, this can make a loan tempting in non-emergency situations. Payday loans should be taken as emergency funds only. Apply for this type of loan only when you know how you’ll pay the money back. It is wrong to treat them as a handy alternative to long-term personal loans.
Payday loans usually come with a much higher APR than other types of loans. The good news is, there are now restrictions and price caps in place to protect consumers.
From its name, “payday loan,” it simply pertains you need to pay it back when your next paycheck comes. This means you won’t have enough time to pay back what you borrowed. Most payday loans are over two to four weeks, but many lenders today offer terms up to six months.
How do I qualify?
Affordability is the key to get a bad credit payday loan. Getting your payday loan application approved also depends on your personal circumstances. The basic criteria include full employment, must be over 18 years old, and a UK resident. For your income, you will need to take home more than £500.
Any provider of bad credit finance will look at your earnings and subtracts all your expenses, which include rent or mortgage, utilities, transport, food, credit expenses, and any other recurring expense. The remaining balance must be enough for you to be able to repay your loan.
If I apply for a bad credit loan, will it affect my credit rating?
Each time you apply for a loan, whether it is approved or rejected, will leave a mark on your credit file. If you already have a bad credit, further credit searches could make your situation even worse, as multiple marks on your credit file could mean to lenders that you can’t manage your finances effectively. Keep in mind that if you make multiple loan applications at once can damage your credit file, too.
As for any type of loan, affordability is of great importance. Financial Conduct Authority (FCA) have strict regulations for lenders across the country. A payday loan provider must lend responsibly and only to those who can really afford to make the repayments of the loan.
Always remember that you must always borrow within your means, so you won’t have trouble making the repayments. Bear in mind that payday loans are for emergencies only.
Being approved for a loan with bad credit is already a good thing. Take advantage of this and use it to rebuild your credit record. You must be able to repay your loan commitments in full and on time. This will help you avoid piling up a terrible cycle of debt, and your credit score will improve. You can get a better loan deal if you have a better credit score as well.