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Bad Credit Loan - Pros and Cons

Admin | 07 Sep 2021

1. Advantages Of Bad Credit Payday Loans

  • Payday loans for bad credit are often available when you cannot get help elsewhere. It could be the difference between losing the use of your car or being able to pay for those emergency repairs.
  • The application process is relatively simple and non-intrusive.
  • Payday loans are unsecured loans. This means if you do miss a payment you won't risk losing a valuable possession (although there could be other financial consequences).
  • Applications can be completed online for speed and efficiency.
  • With some personal loans, you are tied into repayments for months (and even years). With a bad credit payday loan, your commitment could be over in a matter of weeks.
  • Payday loans are for relatively small amounts of money. This keeps the cost of borrowing to a minimum.

2. What Are The Disadvantages Of A Payday Loan For Bad Credit?

  • Payday loans are often available to consumers that might have applications rejected elsewhere. This can make a loan tempting in non-emergency situations. It would be wrong to treat them as a handy alternative to a traditional long-term loan.
  • Payday loans usually have a high APR - much higher than other types of personal finance. There are no restrictions and price caps in place to protect consumers, but it is always wise to be aware of exactly how much you' ll be paying in total.
  • The definition of a payday loan states that it should be there to bridge the gap between your next paycheque. As a result, you won’t have long to pay back what you owe - which can sometimes create a problem.

3. Will Applying For A Bad Credit Loan Affect My Credit Rating?

Applications for loans, whether they are accepted or rejected, will normally require a formal credit search before approval. Doing so will leave a footprint on your credit file. If you already have an adverse credit history, further credit searches could make your situation even worse. Multiple footprints on a credit file can indicate to lenders that you are unable to manage your finances effectively.

Making multiple loan applications in quick succession can damage your credit file. It is recommended that you do not continually apply for loans in succession if you are repeatedly declined.

This is because the next lender will be able to see your most recent application and successive loan applications may give a negative impression.

4. Summary: Bad Credit Payday Loans

Even if you've made mistakes with your finances in the past you might still be a good match for bad credit loan products. We work with specialist lenders that will consider your loan application based on many factors.

It is important to note that any type of bad credit loan is designed to be responsibly borrowed and repaid. This is why you must have a regular income to get one.

If you need to borrow money quickly for any reason, but find yourself unable to access more mainstream finance options (due to poor credit history), a small bad credit loan can be very useful.

If you are able to pay back your loan repayments on time each month, you may start to see your credit score rise. This could mean access to better loan offers in the future (with a more competitive APR) and access to a wider variety of mainstream credit products.

 

If you are really in need of quick cash for personal expenses, apply for a bad credit loan with My Cash Online today.