individuals with bad credit often panic when an emergency arises. Already barely making it from payday to payday, an emergency such as an auto repair, sick child, or a job layoff, can send them spinning out of control. So what happens when good people with bad credit have an emergency need for money? Maybe a parent is ill, maybe the car needs repair, or maybe they need to see a doctor and don’t have any insurance or money. Whatever the need, whatever the emergency, good people with bad credit have limited options.
They need a personal unsecured loan and the need it now. In almost every neighborhood there is one lender who reaches out a helping hand. That lender is a payday loan company. Payday lenders offer small short-term loans with no credit check. The only catch is that the borrower must pay them back from their next paycheck. Usually the borrower pays between $15 to $30 interest for a $100 loan with a guaranteed repayment in two weeks. At first blush that doesn’t seem like so much, but actually annual percentage rates work out to 300% to 1500%.
Unfortunately, too often the first payday loan, turns into a series of payday loans, with the borrower digging themselves further and further into debt. Because of the public outcry about the extraordinary profits being made from the people who can least afford it, other institutions have stepped up and are beginning to offer short term personal loans.
Credit unions were the first to rush in and offer short-term loans to their members. Other institutions, such as banks and savings and loans are beginning to offer these loans to their banking clients. There are several advantages to getting a loan from a credit union, bank or savings and loan. First, the interest rates they charge are far less than those offered by payday loan companies. Second, these institutions extend the repayment period from two weeks to usually around 90 days—making it far easier for the borrower to repay the loan without having to take out another loan. Finally, credit unions, banks and savings and loans limit the number of short-term loans their clients can get in a year.
The most important thing for individuals with bad credit to do when an emergency arises and need a personal loan, is to explore all the options and find the best one for the long term.
Source: http://www.3x24.com