Loans with bad credit, are they worth it?
If you google “loans with bad credit” or “bad credit loans” you will see many ads and website links informing you of their quick, fast applications and same day payment processes. “Approval in under 60 seconds!” Processing times is a common theme when you compare bad credit loans. Promises of speed and convenience everywhere you look, it has to be too good to be true. Well although these promises do hold, the pros of getting one of these bad credit loans are not worth the consequences that come along with them.
High Risk Comes High FeesHaving a low credit score or being considered to have bad credit, means lenders will be less inclined to lend to you as they believe there is a higher chance that your loan payments will default. Defaulting on a loan can be damaging to your financial situation and potentially put you into a vicious debt cycle, this is why many lenders will decline applicants who do not meet a credit score threshold.
- A Low credit score means a high risk of loan defaults.
- Loan defaults can be further damaging to your credit score and finances.
A Plaster Over a ScarThe reason these bad credit loans pop up with keywords such as “easy” and “fast” is because they are offering a quick fix answer that doesn’t give you the solution to your problem. They offer only short term remedies that help you get by until next week or next month, well that’s what they make you think. You will have to pay back what you borrowed plus all the extra expenses that come with a bad credit loan.
- Daily compounded interest
- Establishment Fees
- Debit/Payment Fees
- Default Fees
- Direct Debit Cancellation Fees
- Extension Fees
One Step Forward, Three Steps BackAfter receiving your bad credit loan and finding out you are unable to manage the high repayment amounts, you may find yourself in a dangerous position.
- Failing to pay for your loan has added additional fees to your loan balance.
- The loan balance then has interest compounded further and increases more.
- Repayment amounts become unmanageable, and you need to go elsewhere for more financial assistance.