Let’s review BadCreditLoans
So you are desperate for a loan but you have really bad credit? Where do you turn in such a situation? There are many loan companies that offer loans to individuals in your situation, but one of them is designed specifically for people with really bad credit. They are called BadCreditLoans.com and they claim to “Help When Others Can’t.” This is a type of payday loan that can be access 100% online without ever setting foot in a financial institution.
When you are really in a financial bind, the options tend to be terrible – small dollar amounts with incredibly high interest rates. Bad Credit Loans is no exception, though they do not offer the loans themselves. They are actually a marketplace that points you in the direction of lenders who may take you on and offer you the loan that you are looking for.
To apply, you must:
- Be 18 years of age or older
- Supply your phone number and email address
- Show proof of citizenship or legal status
- Show proof of employment for the last 3 months
- Make more than $1,000 per month
- Have a checking account
These requirements are pretty standard for anyone offering to lend you money. They need to understand your financial outlook in order to make a decision about how much of a risk you are. They may also ask you when you will be able to pay off the debt, and where the money will come from that you will use to repay the debt.
Here’s the part where it gets really interesting. The average annual percentage rate tends to range anywhere from 230% to an astronomical 2,330%! Why would someone ever take a loan at these rates? If you are struggling enough for cash and you have really poor credit, you may have no other options available to you. No judgement here, we just want you to know what you are getting yourself into.
These loans are designed to be paid back within very short time periods, like one to three months. They are not designed for you to pay over the course of years. If you know you can pay back the loan within a month, it may not be a terrible option when you are in a sticky situation.
What We Like About BadCreditLoans.com:
- They make financing available to borrowers with really poor credit.
- They work with a network to try to get multiple offers on the table for you. This allows for competition and ultimately lower rates for you, though not significantly lower.
- It is free to apply.
- The decision is considered “instant,” meaning you will get an answer within just a few minutes.
What We Don’t Like About BadCreditLoans:
- You can usually only get up to $2,500 or less.
- Interest rates generally start at 230% and can get all the way up to 2,330%.
- If you do not pay off the debt by the deadline, you can suffer from insanely higher rates and get stuck in a very bad situation.
Fees vs. Interest
One of the worst things about taking a payday loan is that they treat your loan as a cash advance rather an a loan, so they charge a fee instead of interest. The difference is that in the case of a loan, a part of every single payment goes to paying down the principal balance. On the other hand, a payday loan or cash advance payment does not necessarily do this. The payments can go 100% to the interest rate, which can make it really difficult to ever pay off the initial debt, causing a downward spiral into snowballing debt that continues to grow larger and larger.
How to Avoid the Downward Spiral
Make sure to pay a little bit extra on every payment and designate it to the principal balance. This is the only sure way to pay off the debt as opposed to just paying off the fees and never seeing the debt actually decrease. Even if you can only contribute $10 to the principal balance on each payment, be sure to do that. Every little bit counts and goes a long way towards lowering your burden.
Why Take a Bad Credit Loan?
Knowing all of this information about Bad Credit Loans, what might be a situation in which you would want to use their service?
Let’s say your rent is overdue for the month but for some reason you don’t have enough money in the bank to pay it. Perhaps because your car stopped running properly and you had to replace it and you don’t get paid until next week. Perhaps you lost your job and have had no income for the last sixty days.
This is a very sticky situation and could lead to eviction. You know that your rent is $1,250 and that you are receiving $1,750 next week from some source or other. Taking a Bad Credit Loan would give you access to the cash that you need to pay your rent and give you some breathing room and since you will pay off the loan next week, the interest may only be as high as 63% between now and then.
In a situation like this in which you might lose your place to live or have your electricity or water shut off, the ability to stay in your home and keep your utilities on may outweigh the exorbitant cost associated with taking the loan. While the terms of a payday loan like this are not ideal, there are times when you have no other options and these companies are there to take advantage of this knowledge.
There is always someone having a bad day, a bad month or a bad year financially and because of this there will always be a need for a company like Bad Credit Loans to help this person pay for their emergency situations.