You may sometimes find yourself in a situation where you need quick cash, but the fact that you have poor credit scores makes it impossible for you to approach lenders for the money. Do not despair, bad credit loans are loan facilities given to people with poor credit scores. Discover the pros and cons of bad credit loans.
What are the advantages of bad credit loans?
The main advantage of bad credit loans is that the lenders will not look at your credit score history in deciding whether or not to give you a loan. The loans are specifically for people who may not be able to pay back the loans.
Bad credit loans mean that you can cover yourself in case of an emergency requiring money. The fast cash aspect is very alluring for many people and you, therefore, need to practice a degree of discipline when it comes to borrowing.
The turnaround time for bad credit loans is usually not very long, especially, if you apply online. The lenders realize that whoever is applying for bad credit loan must have some kind of emergency situation or urgently need the cash, and will therefore quickly respond to your request.
Bad credit loans can have a positive impact on your credit scores. If you are consistent with the payment, the report will go to the credit reporting bureaus who will upgrade you due to the fact that you’re paying back the loan.
You can also negotiate for an extension on the repayment periods. Lenders will be willing to work or a payment plan with you, taking into consideration what you are able to pay on a monthly or weekly basis, depending on what the agreement is. This can make it less stressful for you to make the payments as per schedule.
Disadvantages of bad credit loans
The loans are very expensive due to the high-interest rates. Due to the fact that the lender is taking a risk on giving you money despite the fact that they know you may not be able to pay them, they will look for a way to protect themselves by charging interest rates. This is why it is important that bad credit loans are short term so that you have control over how much interest you pay.
Bad credit loans also have very many fees that make them quite expensive to take. These include origination fees, late payment fees, and bounced payment fees, among others.
Many bad credit lenders will also insist that you take a secured loan so that they have something of value to sell off in case you’re not able to make the payments on the loan. Since this is a possibility, you may end up losing something of greater value than what the loan may actually be worth.
Take bad credit loans with caution, and make them short term if you can. Be very particular about the lender you go to, and if you can, get a financial expert to take you through the documents before you sign them.