If you are going through a temporary financial crisis and have bad credit, getting a bad credit personal loan could be your only option. Many financial-health experts consider these short-term, high interest loans to be dangerous ? but is it really so? In this article I?m going to tell you when getting a loan might be a good idea, and when it should be avoided.
1. How are bad credit loans different from regular personal loans?
First of all, bad credit loans are always going to cost you significantly more than a regular loan. The reason for this is very simple: since you have a bad credit history, the lender takes on a lot of risk by lending you money.
Secondly, to get approved for a loan for people with bad credit you may have to submit your employment details and be able to confirm exactly how much money you make, how long you?ve been working for your current employer, etc. This is done to protect the lender from borrowers who simply won?t be able to repay the loan because they have no regular income.
2. Things to avoid
The very fact that you are considering a bad credit loan means that you credit score is probably way below average. This, naturally, means that your budgeting skills are far from perfect and that?s exactly the reason why most financial experts believe that bad credit loans often do more harm than good. So, if you find yourself in desperate need for cash and decide to get a loan ? make sure that you spend it well and have a clear repayment plan drawn out before you sign any paperwork!
Some lenders are less than perfect when it comes to transparency and customer service. Always read the fine print and make sure that you are not agreeing to outrageous late payment fees and other additional charges. You should also use a reputable online comparison service to obtain quotes from at least a few different lenders (learn more at Go AAGP).
Remember that missing a loan repayment is an absolute no-no. It will ruin your credit score even further and will make it impossible to borrow any money in the future. Always make sure that you have enough money in the bank to cover loan repayments and follow up with a quick phone call to make sure that everything went smoothly.
Source: http://www.lucidmovement.com/finance/are-bad-credit-loans-dangerous/
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