Friday, December 15

Are Fast, Bad Credit Loans in The Best Interests of Your Financial Standing?

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So many of us can key into the idea and prospect of the so-called fast, bad credit loans. With a negative cash flow, little income and dwindling credit, it’s not surprising that these types of loan offers, that we find both in our home mailboxes and email inbox, are tempting. The question becomes, how much progress will we make by ‘taking advantage’ of these types of loans?

With a bad credit rating, you shouldn’t expect to take out a loan that will best serve your financial objectives. The lending institutions are well aware of your credit rating. If your credit rating is bad, the bankers simply adjust the lending model, one which matches up with your credit score. However, if you feel you must take a loan of this type, there are a few things you can do to begin rebuilding good credit at the least cost.

It’s a good idea to shop around before committing to a loan. Even with bad credit, there’s still competition among lenders. Talk to your own bank and, if you belong to a credit union, check out their terms as well. When you’re desperate for cash, the fast, bad credit loans should be your remedy of last resort. For one thing, the amount you’ll pay in interest and fees will knock your socks off. Don’t count on the bankers to reign in your spending. The bankers want you to spend more, accruing interest apace. The key to getting the best terms is knowing that the banks will compete for your business and shopping your loan.

The loan application and process takes into account your poor credit history and balances it off with the upside. For example, you might have been on your current job for a good long time, yet failed to meet your financial obligations. Perhaps you became seriously ill, or encountered an unforeseen financial catastrophe. Both of these scenarios invite an explanation to the lender. Offering an explanation may help the banker fill in the picture and mitigate the downside a bit, helping you get a slightly better APR and terms.

While your own bank may be on the up-and-up, never make the mistake of thinking that they’re in the business of making fast loans to people with a poor credit rating, that is, not unless it profits their bottom line. While your own bank may approve your loan, know that profit supersedes any other decision criterion.

So, where do the fast, bad credit loans take you, financially? Not far. You’ll get a high APR, as well as budget-busting penalties. Are you prepared to deal with this? Might you be better off paying off your current debt, and not incurring new debt? You betcha! Another possibility may be a debt consolidation loan, which bundles all your debt into a single, manageable monthly payment. This results in a better monthly cash flow, money you can use to tackle other needs, or put in a savings account.

As for the fast, bad credit loans: do you really need this quick influx of cash to make ends meet? Bad credit is bad credit. Any lending institution willing to extend credit to a poor risk is doing so with an agenda for greater profits. Don’t be fooled. Don’t act impulsively.

If you still feel that the fast bad-credit loans are the way to go, don’t jump in blind. Read the fine print and know what you’re getting in to. The fast, bad credit loans are rarely your only and best option.

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