You probably have heard about so-called bad credit loans. These are loans provided to individuals who have poor credit scores or just very little credit history. They are often obtained easily without the need for a lot of paperwork or documentation.
Most lenders of bad credit loans approve applicants quickly and will do so without checking the applicant’s credit score. The most an applicant needs to get the loan is a form of identification and a bank account. There are some lenders that will offer money to people who are not employed.
These loans come with extremely high-interest rates and fees. Some lenders charge about 300 percent interest on loans of $100 or more. That is almost enough to make a person with bad credit look to borrow money elsewhere such as through a family member or a friend.
While these loans are expensive, they are not always the worst option to take. When these products are used responsibly they can be a great way to re-enter the world of credit and begin improving one’s credit score. They can also be a much more affordable alternative to bank fees.
Most banks charge about $35 per overdraft or insufficient fund item. If you experience just one overdraft on something like your rent payment and you had a few other payments pending in your account, you could easily find yourself strapped with over $300 in fees for half a dozen items. Your bank might have even tried to put a few checks through your account a second time resulting in two fees on one item.
Considering how expensive bank fees can be, you would be much better off getting a payday type of loan with your bad credit. There are good uses for these high-interest loans and avoiding bank fees is just one of them.