Personal Loans For People With Bad Credit In Washington
Lenders will tell you that the riskiest loan is the unsecured personal loan. Why? Because if the borrower defaults on the loan, the lender has nothing to sell to recoup all or part of the money they lent. Since personal loans are inherently risky, personal loans to individuals with bad credit are the riskiest loan available.
Emergencies are an equal opportunity affliction-we all have them. Individuals with great credit have a plethora of choices; those with bad credit have fewer. Recently credit unions and some banks and savings and loans have stepped up to offer personal loans to individuals with bad credit. Banks and credits unions offer lower interest rates and longer terms of repayment. Not only that, but many credit unions and banks offer credit counseling and debt consolidation.
Once the only option for people with bad credit, payday loan companies still meet a need in the community. Usually the only requirement to get a loan is that the borrower be employed. With payday loans, the borrower writes a post-dated check for the amount of the loan and the interest. For instance, if the amount of the loan is $100, the borrower would write a check dated for his/her next payday in the amount of $115 to $130. When the next payday arrives either the borrower comes in and redeems the check or the lender deposits the check.
Because payday loans are very short-term, they present a risk to the borrower. Most borrowers turn to payday loans because they are in an emergency situation. Perhaps the car needs a repair, or their child needs to see a doctor, or maybe they need money to attend to a sick parent. Payday loans must be repaid usually within two weeks, if the borrower can’t repay the loan; they pay the fees, and roll the loan over. So now the $100 loan will cost them $30 to $60 per month.
Once a borrower begins the cycle of rolling over their loans, there is often no way out. The payday loan that was meant to solve an emergent problem has become the problem itself. If for instance, a person borrowed $100 and wrote a check for $130 to pay the principle and interest, only to find out that come payday, they didn’t have the funds to repay the loan. The borrower then pays the $30, and rolls the loan over. If the borrower rolls the loan over three times, he/she has paid $90 in interest in six weeks.
Bad credit does have to mean bad choices. Individuals with bad credit should shop around for emergency loans to see what is available to them before the emergency hits. When an emergency does occur, they are ready to get the best loan with the lowest interest rate for their situation.
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