How to Get a Personal Loan With Poor CreditIf you have an immediate need to get a loan but you have poor credit, low rate payday loans offer a direct solution to your financial worries. This is a type of income-based loans that do not require collateral, but is secured against a borrower's future earnings. To apply for a small payday loan of 200 dollars, the payday loan lenders simply require you to prove earnings from your income in order to give you a cash advance for a specific period of time.
What Are The Uses For Payday LoansYou can apply for an online payday loan and use it for any reason. There are no restrictions on how you can use the money although for most people, they tend to use it for emergency needs or to bridge the gap between paychecks. Common reasons quoted by customers are that they need the extra money for unexpected bills such as auto repair or home improvement needs.
What Are The Advantages With Payday Loans?The most obvious benefits of using payday loans is that they can be availed by people with poor credit. Some lenders also offer payday loans online with no credit check and together, they are the main reasons why they are so popular with consumers. Another advantage with payday loans is that they have a very simple loan procedure. Most lenders operate payday loans website to allow borrowers to apply for an instant loan online with 1 hour fast approval. This means that if you apply for 1 hour personal loans with no faxing required, you can get instant decisions on your loan application and those that are approved can expect to have the cash in the bank account within the same day. Compare this to mainstream lenders where it is very unlikely that banks can offer the same speedy procedure due to their stringent underwriting process.
For small personal loans under 1500 dollars, there is also no need for collateral. You can get unsecured cash directly from a payday lender even though you may have bad credit.
What Are The Disadvantages With Payday Loans?The disadvantages for payday loans are the high risk associated with this debt and the short length of the loan tenure. Almost every payday lenders charge a high interest rate compared with other forms of loans. If you take into account that payday loan users are often the unbanked, from lower income groups, these high-risk loans can easily land someone into a debt trap, stuck under payday loan debt for years.
It is not helped by the fact that payday personal loans have very short loan tenure. These cash advance lenders expect you to repay the whole loan by your next salary date. Not more than 30 days then, or even shorter if you happen to be paid on a bi-weekly basis. This is where it gets dangerous. For example, if I need to borrow 1500 dollars now but I only earn 800 dollars monthly, I may over-commit myself into taking up a loan which I may not have the capability to repay within 30 days. If i fail to pay back, this can bring me into a financial hole worse than before I apply for it.
Despite their flaws, a short term payday loan comes in very helpful when there are no other alternatives to get a low rate personal loan. To make payday loans work for you, you should explore the different credit options available to you first.