We hear a lot about bad credit personal loans these days and it is causing some controversy. People are divided as to whether it is beneficial or not. Some people claim that because of its unique characteristics this kind of loan can be a blessing to those who are facing financial difficulties. There are those who are pointing out to the fact that the together with the benefits are several drawbacks.
To help you, here are some of the reasons why you ought to stay away from bad credit payday loans from direct lenders:
Incredibly High Interest Rates
You Take out Little
The major reason why you ought to stay away from this sort of financial product is because of the interest rate. Usually the people who get this kind of loan would only need a couple of hundred dollars at most. These are usually to pay some bills that are set to become due before the next pay check.
They Take out More
What they don’t reckon with is the fact that the payday companies could charge as much as 25% of the amount just for a term that covers a week or two. When you extend that, it could mean a lot more. When you think about it you’re throwing away a good portion of your income just on the fees of the loan.
Falling into a Trap
Normally a hundred dollars each month should not make a difference, at least not that much but most of the families who get this sort of loans mostly have low incomes. They are the ones who work for a minimum wage. So when they fall into a loan trap, which happens when a borrower is forced to take a loan each month in order to cover up for the first one, it could mess up their finances.
There Are Alternatives out There
Advances on Credit Cards
There are alternatives that are recommended by experts that you should try first before you get a loan from a payday company. Try resorting to taking out a cash advance on a credit card instead. Though the interest rate on that is still high, it is still a lot lower than what you can get from if you resort to a loan from a payday lending company.
Borrow from Friends or Family
Another option that you should look into is to just borrow the amount from people that you know, like your friends and family. That kind of borrowing would have no interest and there would be no fees involved so it would be the most advantageous one for you. You could also try asking your employer if they could give you a cash advance. That’s your money after all that you have worked for.
Try to Avoid Borrowing If Possible
The best way is for you to avoid being in a situation where you would need to borrow money in the first place. You can do that by getting a higher paying job or maybe asking for a raise from your employer. There are ways that you can get more money. You just have to be bold and daring when it comes to exploring all of the possibilities.