personal finance

Staying Current on Bills with Bad Credit Loans

Staying Current on Bills with Bad Credit Loans

Falling behind on a single financial obligation can have ramifications that stay with you for many years to come. When it happens, you may not realize the severity of the moment. Most people see a single late bill as a modest issue, but it can have a snowball effect if it harms your credit or causes you to overdraft on your bank account. The good news is that it is possible to use installment loans to avoid such circumstances.

What Is A Payday Loan?

A payday loan is a short term loan that is available to anyone who has a job and a bank account. There is no credit check, and the loan is usually available through a wire transfer within a few hours. Such bad credit loans are the best solution for people who have poor credit, as finding a loan when you have bad credit is an almost impossible task.

Most payday loans are available in sums of anywhere from $100 to $1000, while they have high-interest rates associated with them. Since it is a short term loan, the interest rate does not have much of a dollar impact. For instance, a payday loan of $200 may only have $12 to $14 in total interest that is due when the loan is paid back.

Payday loans are generally paid back within two or three weeks. The lender lays out these terms when they provide the borrower with the loan contract. The contract clearly states the borrowed sum, interest rate, dollar amount due, and when the payment is due. Payday loans are paid in a single installment.

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Who Needs Payday Loans?

Payday or installment loans are useful for people who may otherwise have no access to lending. Individuals who are recently out of high school or college would not have any credit history, while some people may have very poor credit. It is difficult to get a credit card or personal loan without excellent credit.

An installment loan is an ideal solution in these circumstances. It allows you to receive a modest sum of money when you are facing unexpected expenses, or you are not getting paid on time. Payday lenders only ask for your personal details and your bank account information. If you have a valid bank account where your paycheck is sent through direct deposit, you should receive payday loan approval within minutes.

Paying Bills On Time with Payday Loans

Most Americans do not have a significant nest egg should they run into financial problems. Say you do not pick up as many shifts during a two-week period, or you run into an unexpected expenditure. You may not have enough money to pay all your bills.

It is easy to say that you can pay your bills late. But it can significantly harm your credit score, especially if you already have poor credit. Some institutions also attach late fees to these bills, so you could be looking at an extra $10-$20 charge for each late bill.

Estimates show that the average interest payment on a payday loan is less compared to the late fees for many bills. So if you have to pay $200 worth of bills, it is reasonable to assume that you would pay less in fees if you got a payday loan.

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It is especially true if you are at risk of overdrafting on your bank account. Banks generally charge anywhere from $20 to $40 for each overdraft. If you have multiple bills that are on autopay each month, you could find yourself being charged an overdraft fee by your bank for each bill. Some banks also charge insufficient funds fees.

Responsible Financial Practices with Payday Loans

If you are hoping to manage your finances responsibly, payday loans can help you deal with difficult times. Say you are not paid on time, or you had to pay $500 to get your car fixed. A payday loan would help you get through the coming weeks of bills and everyday expenses, before you can pay back the loan with your next paycheck.

The major advantage of a payday loan is that it would allow you to avoid overdrafting on your bank account or being late with any bills. You can meet all your financial obligations on time, steadily improve your credit score, and ensure that you are not paying $50 to $100 in late fees, insufficient funds fees, or overdraft fees in a given month.

No one should rely on payday loans to get through every month. But they offer valuable and easy to obtain money to people who have low to no credit, ensuring those individuals can stay on top of their finances and steadily improve their credit scores.

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