It can be tough
trying to get a loan if you have a bad credit record because financial
institutions consider people with bad credit as high risks. So most banks and other
major financial institutions would probably deny your loan application. So why
do other lending agencies offer payday loans for bad credit?
Why Companies
Offer You Payday Loans For Bad Credit
If you're
thinking that even though you are a good person, it doesn't make much sense for
a lending agency to risk investing money in you when you have a bad credit
record, you may be partially right. But they do offer you loans and you most
likely will be approved. Why would they do such a thing?
- Surprisingly enough, these loans are excellent (but risky) business propositions for the loan companies.
When you
realize that about 20% of the people who live in the United States are living
beyond their means, payday loans for bad credit has a lot of potential
customers.
Since most of
the people in this target market are very desperate for money, most of them
will accept terms and conditions that they probably wouldn't if they had better
credit.
And these are
the exact terms and conditions that are behind the lending agency's being able
to offer the payday loans for bad credit.
Here are some
of those conditions:
1. They have
very high interest rates
2. They limit
the amount of money you can borrow - the payday loans for bad credit are
usually not more than US $1000
3. There's a
limited recovery period - the loan has to be repaid with the next paycheck.
That's how they got the name "payday loan"
4. There are
high processing fees
5. If an
extension is required (for up to a maximum of 3 months) there's a hike in
interest rates and fees
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