It is estimated that about 30 to 35% of Americans are faced with bad credit and this certainly has implications on their ability to obtain loans from financial institutions. One of the groups of people who fit well for short term loans is those who have bad credit. When you are faced with bad credit, financial institutions are reluctant in offering credit facilities. Emergency loans are designed to enable individuals obtain cash in relatively less time without hassles.
You may not be required to provide evidence of your credit score. This means that even if you have suffered bad credit, you can still enjoy these financial lending services. The lenders understand the challenges faced by borrowers and especially those who have plunged into bad credit.
The payday advances are short term and unsecured and as long as you can provide prove of employment or payroll records, you are able to secure yourself a fast loan. However, these loans come with setbacks and this is the reason why they are not suitable for everyone. You should go for payday advances or cash advance loans only if you have a pressing need for money and you have no alternative where you can get a loan.
Since many people with bad credit score are not likely to get loans from conventional banks and lending institutions, they may find the short term emergency loans more suitable to solve their urgent financial needs. Because of the risks involved in these loans, borrowers are subjected to high interests rates and they can pay somewhere between 15 to 30% of the loan amount in a term of two weeks.
This translates to an annual percentage rates (APRs) ranging from 390% to 780%. This shows that borrowers need to make a good decision before they opt for these loans. In addition, some states regulate these loans. The regulations cover the rollover terms, the minimum and maximum amount that a borrower can obtain as short term loan as well as the interest rates.
The Consumer Financial Protection Bureau (CFPB) has the authority to regulate payday and title loans. This organization is charged with policing issues that relate to financial products and services for unfair and deceptive practices. Individual states, guided by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which paved way for the Consumer Financial Protection Bureau, have enacted their laws to regulate the industry at the state level.
Because lenders understand that they are dealing with people that are faced with bad credit, they do not always particularly emphasize your credit history as the sole variable when qualifying you for a new loan. They instead focus on your ability to repay the loan such as prove of employment or income earning activity. This means that regardless of your tainted credit score, you have the opportunity to secure yourself a quick cash advance that you can use to solve your pressing financial needs.
Bad credit payday loans are therefore may be a good options for those people who are caught up in financial crunch and faced with unexpected expenses such as medical bills, school tuition fees, broken down car or servicing an existing loan, but only when used with extreme caution and after exploring all other financial altneratives..