Thought About A Bad Credit Loan?

16 July 2012 02:30 - Phoebe Robinson

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Thought About A Bad Credit Loan?

Have you got bad credit and are struggling to get a loan, well this is due to the financial institutions using a process called credit scoring to assess the risk of lending you money. Applicants with a poor credit rating have higher chance of being rejected a loan. However even if you have been rejected by the banks, there is an alternative, this alternative comes in the form of an unsecured bad credit loan given by providers willing to lend money to high risk borrowers.

An advantage of bad credit loans is that they ensure guaranteed acceptance. As long as you have a full-time job, you can still get a bad credit cash advance. It involves no credit checks. A further advantage is if you are in a emergency situation such as you car needs fixing it easy very easy to borrow money. Moreover bad credit loans are any purpose loans meaning that the lender will not ask you why you need the cash so you can use it how you please.  Finally the speed and ease of bad credit loans is often what is so appealing. The money can be deposited into your account within 24 hours and there is minimal paper work involved.

However of course there are some drawbacks. Firstly the cost of borrowing is high. Due to the risk of default, most loans for people with bad credit are expensive and have very high interest rates. Moreover there are concerns over the transparency of information provided by the lenders. Often lenders do not display clearly the terms and conditions of their loans therefore people end up having to pay unexpected costs if they miss a payment or delay it as the penalties are only shown once the loan has been registered. Furthermore there is the danger of falling into the cycle of dependency if you take out a bad credit loan. High interest rates mean that borrowers have less money to pay their bills the following month. This often led to another application for a loan and this is how lenders make the majority of their money. 

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