A bad credit loan is generally a loan that a person with poor credit can get. A person with poor credit could possibly get a normal loan but due to their bad credit the interest rate would be very high. Most bad credit loans are payday loans which can be dangerous.
A payday loan is a loan that is intended to cover a borrower’s expenses until their next payday. Payday loans may also be called a payday advance or a paycheck advance. Normally payday loans are between $100 and $500 and are due in two weeks. Payday loans also have a higher interest rate of up to 400% APR. There are two ways to get payday loans, through retail lending and internet lending.
Retail Lending
Through retail lending a borrower goes to a payday lending store and secures a small loan that they must pay back on their next pay day. The payday loan will generally come with finance charges ranging from $15 to $30 per $100 borrowed. This means the rates range from 390% to 780% APR. The borrower will write a check to the lender in the full amount of the loan along with fees and will normally pay it back in person when the payment is due. The lender can process the check through the borrower’s checking account if they choose not to make the payment in person.
The borrower will receive a bounced check fee from their bank if they do not have the funds to cover the payment. Additional fees may also be charged to the borrower from the lender such as an increased interest rate. In the case that the borrower cannot pay they will be offered an extended payment plan for no additional cost by members of the national trade association.
Internet Lending
Through internet lending a consumer will fill out an application online. Another option is that the consumer can fax a complete application with personal information, employer information, bank account numbers, and their social security number on it. The borrower will also fax a recent bank statement, a copy of a check, and signed paper work. The online lender will directly deposit the loan into the borrower’s checking account and they payment and charges will be electronically withdrawn on the borrower’s next payday. You can find internet payday loans through e-mails, paid ads, referrals, and online search engines.
In conclusion a credit loan that someone with poor credit can get his considered a bad credit loan. People with bad credit can still get normal loans but the interest rate will generally be much higher than for someone with good credit. Payday loans are the most common loans that are considered bad. Payday loans come with high interest rates and high APR. You can get a payday loan through a retailer or through the internet. If you fail to pay back the loan on your next payday then you will have some extra fees to cover. Also if you fail to pay then you will be offered an extended payment plan for no additional cost.
Posted under Internet
This post was written by Chris Channing on May 13, 2008
