People with bad credit can now get a unsecured short term loan but should weigh the pros and cons ahead of time to make sure it’s the right financial decision for their personal situation.
Consumers with poor and bad credit, now approximately 25% of the population in the US according to the credit scoring developer FICO, have fast access to cash online with hundreds of lenders ready and willing to lend them money. These loans, referred to in the industry as ‘bad credit loans’, cash advances and payday loans are relatively small, unsecured loans that are designed to be repaid in short order. Bad credit loans typically range in amounts between $100 – $1000 and carry fees and slightly higher interest rates.
Here are the top 5 pros and cons to think about in 2013 before committing to a bad credit loan or cash advance:
1 – Fast Cash – Fast cash to help with life’s emergencies can be a big help. People can apply online and get approval and cash in as little as 24 hours.
2 – Application is Easy – The online application is not rocket science. It’s designed to obtain personal information without a lot of extra steps.
Applications are simple online forms that are submitted electronically to lenders area that then vie for the applicant’s business. CreditSources.org has a fast and easy bad credit loan form.
3 – Bad & Poor Credit OK – Traditionally people with bad credit could not get a loan from a traditional bank or lender. This loan type is designed for people with subprime credit.
4 – Unsecured & Low Hassle Factor – Bad credit loans extend unsecured credit to people who would otherwise not have access to the credit market without a lot of hassle. People are used to submitting a loan application and going through a long drawn out process before they get the loan (If they get the loan) – but not in this case.
5 – Secure Application – Applications are typically secure and web sites use outside companies (like Norton powered by VeriSign or GoDaddy) to insure the online application and submission of personal data is secure. When filling out an application make sure the URL address starts with
https:// versus http:// as the “s” indicates a secure connection.
1 – Higher Interest Rates & Fees – These loans typically carry higher interest rates and fees to compensate for the higher credit risk. Applicants should be clear on these terms and understand how much the loan will cost above and beyond the amount being borrowed. Read the terms!!
2 – Terms – The nature of these loans is that they are short-term loans paid back in full (plus fees) typically by the next payday. People that know they can’t pay back the loan back on time shouldn’t get it in the first place. People that don’t pay back these loans on time can create bigger financial problems than they had before the loan.
3 – The “Hamster Wheel Effect” – The Hamster Wheel Effect is when a borrower goes from one loan to the next relying on successive, expensive loans to get by and pay bills. There is no way to get ahead in life this way and it’s an increasing expensive way to live. The Center for Responsible Lending is a good resource for more information on these types of loans and how they can help or create bigger problems.
4 – Saving Money – Getting a payday or bad credit loan can divert people from saving money. Saving should always be the primary goal.
5 – Need Employment and Payroll Records – Payday advance loans rely on the consumer having previous payroll and employment records.
Those that are not employed could be out of luck.
Loans are not available in all states. Visit the NCSL site here for loan statues by state.
So the message is this – People with poor or bad credit that have a life emergency have a way to apply for fast cash but need to understand that the loans comes with fees. People that can live without the loan should simply live without it! Save money, build credit and live happily ever after.
This guest post was written by RJ Sheppard. RJ runs CreditSources.org, a leading authority site on credit related services, bad credit loans, unsecured personal loans, cash advances, credit cards and all things credit.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.