Some consumers were already “feeling the pinch” before the current economic situation (high gas prices, businesses failing, increases in home foreclosures, etc.) ever occurred. Many people were already facing problems that came from having “less than perfect” credit, and the number is, unfortunately, growing.

For this reason, there has been an influx of businesses that offer “bad credit loans”. A credit check is not required in order to obtain money; rather, a “payday”, “title”, or other similar loan can be obtained.

At first glance, these types of loans for people with bad credit would seem to be “the light at the end of the tunnel”. However, a lot of people do not realize that these loans typically have an extremely high interest rate, and terms and limitations that would make a CPA feel as though he had not opened the first college textbook if he were to have to try explaining them.

Those who do have bad credit need to realize that quicker isn’t always better, and just because there is a business offering bad credit loans on practically every corner in those states that allow them to operate does not mean this is the best option. There are financial institutions that are more reputable, and operate within higher ethical standards, than those mentioned above.

These institutions are willing to extend loans for people with bad credit. Granted, the interest rate may be higher for those with lower credit scores than it is for people who have better credit ratings. But, these places will try their best to approve a loan if other criteria can be met.

Some institutions are lending money to those with bad credit, with the stipulation that the borrower(s) attend money management classes. The business itself may offer the classes, or may be in partnership or alliance with those who offer these classes. They may even consider participation in these classes as a reason to adjust the interest rate upon successful completion and a number of on-time payments.

Other reliable loan companies may not necessarily provide a “new” loan, but may allow for an adjustment of terms, refinancing, or the extension of an existing loan. This will allow the borrower to make lower payments, albeit over a longer period of time, but with the opportunity to improve one’s current “not so good” credit rating.

Those loan companies who do make loans in which one’s car title is the security, or a personal check is “held” until the next payday, or similar loans can have their place. If a true emergency arises, such as a major car breakdown, a severe medical emergency, or other similar situation that occurred with no forewarning whatsoever, then one may have no choice but to avail him or herself of such a service.

However, if this is the case, the borrower should take care not to allow him or herself to be swept up in the heady rush of just being able to walk in, lay down a check or a car title, and walk out with cash. The borrower should remember that this is a legitimate emergency situation that will not likely happen again, at least for a very long time, and that this is the only time that this type of service will be used.

Most of the time, however, there are other options. Bad credit loans are available from places that have been in business for many years, and will likely be in business for many more years, and the people who run these places are willing to work with those who have poor credit but need financial assistance.

Tags: bad credit, cash, credit, financial assistance, foreclosures, gas prices, interest rate, Loans, money, money management, payday

As the economy worsens and more and more people are getting foreclosed on, I’ve noticed several more places advertising payday loans and cash advances cropping up. There aren’t many statistics or figures out there to tell us how many people are getting payday loans or if the number is growing. The most current figures are from 2005, when the industry issued more than 28 billion dollars in loans, but financial experts are sure that these numbers may double or more as the housing crisis worsens.

If you’re not familiar with payday loans, the idea is fairly simple. If you need a short term loan of just a few hundred dollars payday loans sometimes called cash advances may be the only option you have. These payday loan companies don’t check the borrower’s credit and they don’t deny loans to anyone, as long as they can show some type of income or government subsidy. The loans typically need to be repaid in just one or two weeks.

Sounds great, doesn’t it? Everyone has unexpected and urgent expenses crop up from time to time. However, there is a downside to these cash advances. They often have high hidden fees. More importantly, the interest rates on payday loans can easily range from between 400-1200%. Some estimates have shown that the average person who takes out a payday loan will end up paying $793 over the course of two weeks for a loan of just $325.

There are many horror stories out there from people who have gotten a cash advance and gotten in over their heads. It is much rarer to hear a story from someone who took out a pay day loan and had a good experience. There are several reasons for this. Payday loans used to be more or less unregulated by the government. There were many large scale unscrupulous cash advance lenders out there that took advantage of this. There are many decent payday loan companies out there, the trick is to ask around and compare rates to find one.

And, as much as some companies have helped earn the bad reputation payday loan companies have, a small part of the blame can be placed on those who take out the cash advance in the first place. Many lenders do not take the time to make an informed decision about their payday loans. They may not read through their entire contract before signing it. Then they feel cheated or scammed when hot with fees and interest they weren’t clear about. The single largest mistakes people make when it comes to payday loans is taking out a lot of them. The system is not made to benefit those who rely on cash advances frequently.

Payday loans are not meant to be long term loans or something you use regularly. If you have a short term, infrequent cash flow problem payday loans can be an ideal way to solve that problem. To keep from getting burned, it’s important to do your research before deciding on a payday loan company, to read everything and be clear about everything before you sign any paperwork and to pay off the loan in the time allocated. Most people who get in over their heads do so because they are continually rolling their loans over. This may buy you more time to pay them back, but really it will cost you so much in fees and interest and all you’re doing is digging a hole you probably won’t be able to climb back out of.

Tags: advance, cash, lenders, Loans, payday