Almost everyone is affected by the worldwide financial crisis. Even big businesses are not exempted from economic dislocations. The effect is more visible to the low and middle income level people. When our earnings are distracted, it follows that our credit scores are likewise affected. When this happens, it is then difficult to negotiate for loans with low interest rates. We are left with no alternative but to seek bad credit loans just to tie us over until the next payday. These loans are too heavy to bear with their expensive interest charges. And this is the sad fact that we sometimes can’t evade. But there’s a way to avoid these cash advance loans. You need to do some research first before taking the first offer that comes your way. If you are well-informed about how bad credit loans work, perhaps you’ll not even think of borrowing money from lenders of these payday loans. It’s risky to get entangled to the debt cycle chain once you signed up. It carries with it very high cost of financing that goes with their services. Beware of what could come your way before you’ll avail. It’s wiser to find ways to raise the funds at lower interest rates than having the cash in an instant but with heavier loads to carry later on.
It’s Seeming Attractions
When the economy is in bad shape, loans are very scarce to find. The credit requirements become more stringent that only a select few can borrow money from financial institutions. If you have a bad credit standing, the chance that you have to negotiate a loan is very slim. However, there are still bad credit loan companies that thrive despite the situation. They exist because of the financial difficulties that beset the community due to the poor economic conditions prevailing. But they do not easily come without any burden. The interest rates are usurious so that the cost is too cumbersome to carry in addition to the loan amount. But if you are that person in urgent need and there’s no option for you to choose, there’s no way to avoid these bad credit loans. They are not only clean but come quickly in less than an hour. The proceeds could be at your bank account within 24 hours upon filing your online loan application form. These are the features that seem to attract a good number of people who urgently need money. It is available even for those with a poor credit score on their names. They are easy to work out, but the price is very costly.
While we cannot avoid the negative backlash of an economic downturn, it is always on the safer side of life if we set aside funds for any emergency. This could be possible with people with adequate income though. However, those who work just to make both ends meet can hardly save a sum every payday. It also applies to other people who are carefree and spend every single penny without a budget to follow. These people are the most vulnerable to bad credit loans during their emergencies. They should be informed adequately about the equally negative effects that it could bring them if bad credit loans are their final recourse. A deeper understanding of these loans could make them aware and encourage them to do some preparations like strict budgeting or sourcing of other credits before resorting to these usurious types of credits. In case you can’t do something except to avail, you are more well-informed that these loans are not good at all in solving your financial problems.
How High The Price
One of the common objections against bad credit loans is the high interest that they are collecting from their borrowers. In some Sates the rate is as high as 870% in APR. Although in the Sate of California, it is pegged at 36% in APR for military personnel, non-military clients or private citizens are not covered by this regulation. Most of the States have allowed interest to go beyond this 36% APR. Thirteen States have either declared these loans illegal or barred their operations in their respective jurisdictions due to its usurious interest rates. A study conducted among online payday lenders by Consumers Federation of America (CFA)revealed that the average interest rate on this type of online credit is 650% in annual percentage rate (APR). What is more revealing is the finding that most of the borrowers have been using this credit tool at an average of ten times in a year indicating that they kept on repeating to renew a loan just to cover an old payday account. This is what a debt trap cycle is all about. If you were a victim of this vicious cycle, a significant part of your hard-earned money will go down the drain in the form of interest payments.
The Way Out
Once you get in and allowed yourself to its subjection by borrowing money from this bad credit loan, there’s only one way out. And that is to pay the loan immediately upon its maturity. How can you do this? You need a lot of determination and willingness to undergo a lot of sacrifices. You have to face difficulties by limiting your expenses and forgo those that cater to your wants. You also have to develop a realistic budget so that you have a guide to follow. If you are not determined to get out of it, definitely your way is headed to the debt trap chamber. At the end of 14 days, you’ll see yourself helplessly rolling-over the loan at the same high interest rate. The ritual will be kept repeatedly over and over again.
Do not let the day to pass until your bad credit loans mature. You have to do something in between. Never lets your guards down and resort to constant renewal of the loan when it falls due. It would bring more problems to you than what you have not thought of before. Of course you can avoid these nightmares. You may choose any or a combination of the following actions. You can save your neck from paying more interest expenses on the bad credit loan that you have contracted.
- Seek professional advice-it is wiser to approach a professional financial adviser to give you pointers on how to deal with your high interest paying bad credit loan. He could provide you some leads where to source funds or perhaps guides you about the proper action to take. Shop around and you can get the counseling free of charge in some instances.
- Find a good Samaritan- a good friend or a close relative who has excess funds can free you of your present financial burden. Just tell them honestly what your problems are and your plans how to return the money if ever they will help you. You can perhaps commit an item or part of your paycheck to make them feel confident that you’ll pay on time.
- Review your credit card balances-if you have credit cards in good standing, you may discover that you can avail of emergency cash loans at lower interest than what you are paying for your bad credit loans. This will solve your problem immediately but you have to prepare for that time when your credit bills arrive. You can’t sacrifice your credit cards since these are your best tools to meet your regular daily needs. A good budgeting is always the secret of having a good credit card standing.
- Renegotiate a loan- an outstanding credit line with other creditor that bears low interest could be your lifesaver. Why not try to renegotiate. You could perhaps renew the loan thus raising the funds that you need so as to pay the present bad credit loan and save on interest. Review your credit accommodations and call every loan manager whom you previously dealt with. They can help you if you will try to start the negotiation again. This could perhaps go beyond the 14 day maturity of a payday loan. But at least, you have the preparation to pay the account next time it matures.
- Sell what you can-this is an approach which is most commonly resorted to though do not guarantee that you can raise the needed cash outright. But who knows, somebody in your community needs what you have which you don’t utilize anymore. You can try a garage sale or for sale by owner strategy. An old car or a spare refrigerator can save the day for you and redeem the postdated check guaranteeing your bad credit loan.
- Accept another job-this is a sure fire solution to raise some dollars to solve your maturing bad credit payday loan on time. If you have extra free time to earn additional money on the side, why not? You can save a lot of cash if you don’t renew the cash loan repeatedly.
- Devise a good budget-when it comes to money matters, the best regulator is a realistic budget. You should have a good budget if you want to get out of more problems on your finances. One way to meet your bad credit loans is by following a good budget that provides savings for emergencies.
Your success to get pass off your bad credit loan depends on your full determination to pay it off at once. All the above actions are directed on how you can get out of this situation. This is geared to avoiding a more severe problem if you keep renewing the loan. It is to your advantage to work out every solution offered above and find the best one applicable. Act with dispatch and don’t wait to get chained to a debt cycle.