Short Term Loans
Poor Credit Loans
Into every life a little rain must fall. The rain, sometimes, comes in the form of an unexpected emergency that requires immediate cash to fix without cause any more harm. A little rain does not discriminate and those with poor credit sometimes suffer a shower or two.
Poor credit loans were designed to help those with poor credit to get the financial help they need when times are a little lean and some extra cash would be a welcome relief. Poor credit loans are available, but they come with a price. The price is higher than normal finance charges and sometimes lower borrowing amounts than advertised.
Poor credit loans are offered by payday lenders that are independent lending services and are not regulated by the same regulations that apply to banks, credit unions and similar financial institutions. Some states regulate the payday lenders while other states ban the practice of payday type loans.
Poor credit loans can be taken out at a pawn shop. Technically, the loan is secured as the customer offers an item of value in exchange for cash. The pawn broker is not at all interested in the customer’s credit score and there is no cosigner necessary. The pawn broker will not loan the customer more than the item is worth. Typically, the pawn broker will offer anywhere from 30 to 50% of the real value of the item. These types of poor credit loans are often the most economical loan of all. The customer can just keep the cash and not pay back the loan with the only consequence being they lose the item they offered for the cash. Often time, the customer is not interested in getting the item back. Pawn brokers do charge interest on the poor credit loans, and even though the interest is a little higher than a standard bank loan, it is not as financially crippling as interest on a payday loan.
Banks, credit unions and similar financial institutions offer poor credit loans, but they will require collateral, a cosigner or, in some cases, both. Depending upon the level of bad credit, the bank may require the collateral be in their possession such as the deed to property or the precious metals or gems that may be put up. If an antique or classic vehicle is used as collateral, the bank will require some sort of ownership papers be provided to secure bad credit loans.
Bad credit loans that are paid in a timely manner will help a customer repair their bad credit. Just about every lender, payday lenders included, will report the good and the bad to the credit bureau as they recognize that bad credit loans are sometimes taken out for the purpose or credit repair. Pawn brokers do not report loans not paid back as paying back the loan is an option and not a mandatory part of the loan agreement and they have a method to recover the cost of the loan. Bad credit loans used responsibly can be a very good thing but if they are not managed properly, they can make bad credit even worse.