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Payday Loans for Bad Credit: Accessible, Fast and Trouble-Free

June 25, 2012 | Comments: 0 | Views: 161

For anyone with a low credit rating, the challenge of rebuilding a financial status is a major one. Lenders are cautious with those who have less than impressive credit histories, and so large loans can be a stretch too far. But using payday loans for bad credit improvement, the recovery process can begin.

There is always an attraction to the idea of guaranteed approval on loans, but this kind of convenience is not particularly common. There are advantages and disadvantages to taking on a payday loan, of course, but once the specifics of any financial product are learned, it is easy to work out if it is a good option or not.

Features of the Loan

By turning to payday loans for bad credit improvement, most people can enjoy a real change of fortunes over a period of time. The loans themselves are quite small ranging from just $100 right up to around $1,500. The maximum can vary depending on which lender is approached, but anything over $2,000 requires special arrangements.

As the name suggests, these loans are repaid directly from the upcoming paycheck of the borrower. Guaranteed approval on loans are rare, but as long as the applicant has a large enough income a green light is practically guaranteed. Other aspects typically affecting approval have no bearing at all.

Payday loans, which are also known as cash advance loans, are extremely accessible, and in this regard are amongst the most commonly sought-after loans. But as with all forms of financing, the details are important to know.

The Advantages

There are three key advantages to getting payday loans for bad credit. The first is the speed with which approval can be granted, with more lenders able to process an application, make a decision and even deposit funds into the account of the borrower within just 24 hours. What this means, of course, is that they are a perfect solution to financial emergencies.

The second is that there are generally no checks carried out on the credit history of applicants. So, it does not matter how poor the history is, a guaranteed approval on loans is within reach. This is because income is the only basis on which the loan is approved.

Finally, the speed of approval is matched by the speed of repayment - usually just 30 days. While this can create a challenge, it means that a payday loan is a fast route to credit score improvement. With every loan repaid, the score is increased.

The Disadvantages

The principal concern when taking on payday loans for bad credit improvement is that there can be a lot of pressure to meet the repayments. This is down to two factors: the short repayment term and the high interest rate charged. Between them, ensuring there is enough in a paycheck to meet the payment, and still have enough to cover monthly obligations, can be difficult.

It might seem that having guaranteed approval on loans is perfect for a quick access to extra funds, but the fact is that a short repayment term means that there is little room for a repayment structure. The funds are taken out of the paycheck immediately, so there is little left over.

Interest rates are notoriously high, with some lenders charging as much as 30%. This may seem extreme, but if the loan is $1,500, it means the total interest to be paid is $450. So the total to be taken out of the paycheck to clear the payday loan is $1,950 - a very big chunk.

Donna Hammond is the author of this article. For more information about Bad Credit Unsecured Loan and Mortgages for Bad Credit please visit her website at

Source: EzineArticles
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