How To Spot Bad Credit Lenders |
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A bad credit lender seems like a messiah for a person with a bad credit score. While every other lender in town will chuck his application into the dustbin, it's these guys who will come forward to grant a loan. Now with more and more people looking to own a house or a car, the loan business is on an all time boom. More and more people are looking for loans. But along with the genuine companies a lot of other fakes have also sprouted up. These guys are only there to make some fast money via charges, fees or simply high interest rates. Many do not even have a registered office and operate from flashy websites. So how can you distinguish between a genuine bad credit lender and a fake one? Fake Lenders The first and most obvious way to spot a fake bad credit lender is that they will ask you to pay some sort of fees upfront even before their services start. Now why would you want to pay something even before the services start? It is very clear that after you pay, neither will you hear from the lender again, nor will you receive your money back. When you refuse to pay anything, you might get a real taste of the foul language that these guys resort to. Most of them will try to trick you into paying by saying that since you have a bad credit rating, this is your only choice. But beware of such gimmicks as there are several other genuine bad credit lenders who will offer you much better loans. Genuine Lenders The genuine lenders should offer you a quote after a legitimate examination of your credit score. He should look into your credit and financial details and offer you quote for loans. The customer service is very important. The customer service has to be extremely helpful and friendly before and after the loan. If you have any doubts or queries regarding the loan, the customer service should be more than willing to help you understand them. If you do not get a helpful feeling from the customer service, then you know what to do. The interest rates for bad credit loans are higher, but you should expect to pay something in the range of 7 to 18%. There are some lenders who charge an interest rate as high as 26%. Pay only as much as you can afford or else you might end up defaulting on the payments. Hidden Terms and Conditions Many lenders have hidden terms and conditions which they do not reveal to the customer up front. But when the fees and charges start to surface much later, the borrower notices that the loan has become far more expensive than he wanted. Make sure that your lender has explained all possible charges to you upfront itself. Pre payment penalty is one such atrocious charge. You might be paying a huge interest rate without even knowing that it is going towards the pre payment penalty and not the actual loan amount. If your lender has asked you to pay pre payment penalty then ask him to cut down on the amortization. A long term and the penalty will really cause a huge dent in your pocket. |
