It is nice to not undergo financial issues and keep your money under control, but the reality is not that easy. Personal loans may come in to save the day because you can handle unplanned expenses using them, and small amounts are enough to get back on track.
Personal loans offer high approval rates, speed, and a quick fix to emergencies but borrowers should consider the downside to such loans.
Unsecured personal loans from payday lenders come with many names. They essentially all have the same properties:
Short term loans from payday lenders come with many names. They essentially all have the same properties:
- They are available from online lenders or banks
- They carry a high, fixed interest rate repayable in a very short time period.
- Repayment is taken from the borrower’s bank account where the salary is paid.
- Amounts are generally small, under $1000
- No collateral other than the borrower’s bank account is required.
- Loans are issued very quickly, most commonly, the next business day after an application is received.
- No hard credit checks traditionally undertaken by high street banks are required.
- Because they don’t have hard credit checks, borrowers’ credit scores are less important. Some checking is done by lenders but the most pertinent detail is your proof of income through your paycheck.
- Payday lenders do not share your personal information with banks and hence your credit score is not directly impacted.
These kinds of loans can both be a savior and a curse. Whilst they can solve your immediate cash flow problems, less disciplined borrowers who borrow too much or who miss repayments will have to face high repayment costs as the interest rolls over into the next month. Serious thought should be given before taking out such a loan as many people end up in a spiral of debt. If you are already in debt you may want to consider other options to help you exit like payday loan consolidation.
Credit score guides
Here is an easy guide that can assist you to know your standing.
- 700+ – The highest rating you can get. This is an excellent rating for both unsecured and secured loans.
- 680- 699 – a good score, and you will not have many problems in applying.
- 620 – 680 – this is fair/average, and you are largely safe.
- 580 – 620 – is workable, though you will pay higher rates if you fall below 620 (which is like the ‘cutoff’ point for prime loans).
- 500 – 580 – you can get funds, but you will need to provide extra details when requested.
- Below 500 – you can still get funds, though you will need to give extra details to the lender.
Even with poor credit scores, personal loans can be made to you by online lenders. The challenge is not getting the loan, rather it is ensuring you repay it on time!
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