If you need money quickly, you should try to avoid high risk payday loan lenders. Generally, these loans require a credit score of 680 or higher. However, it is possible to get approved for smaller amounts if you have a low credit score and can prove that you can repay the money in a timely manner.
Avoiding high-risk payday loan lenders
When it comes to payday loans, there are a few things you can do to avoid high-risk lenders. One of the most important things is to check your credit score. If you have a bad credit score, you are more likely to default on the loan. This can result in higher interest rates and fees. Luckily, there are other ways to obtain the money you need, such as car title loans or a line of credit.
Another option is to ask your employer to advance you money. Although many employers are reluctant to give these types of loans to employees, it’s possible to get a salary advance through your employer. While this might not be the most ideal scenario, it can help you avoid paying high-risk payday loan lenders.
Costs
Many payday loan companies impose fees that can quickly pile up, especially if borrowers fail to pay their loan. These fees include rollover fees and late charges, as well as overdraft and NSF fees. Some lenders also charge an additional fee for loading funds on a prepaid debit card.
The Bureau acknowledges that a sizable segment of borrowers end up in extended loan sequences without ever repaying their loans, resulting in significant costs. While the Bureau cites this as a major downside, it also points out that reborrowers use their credit to meet urgent needs, including paying rent or utility bills, or medical expenses.
The bureau relies on a Pew Study, which found that payday borrowers are reluctant to explore alternative sources of emergency funds. But the study did not ask them whether they had used a payday loan, and they indicated that they had done so in “pretty much any terms” – which raises questions about how often they would actually take one.
Credit checks
Credit checks are an essential step before receiving a loan. It helps lenders know whether a borrower will be able to repay the loan on time. Credit checks are not detrimental to your credit rating, but they can affect your ability to get a loan from another lender. These searches leave a footprint on your credit history for up to 12 months.
If you are considering applying for a payday loan but are worried about your credit, you’ll want to know what your options are before deciding on a high-risk lender. Some high-risk companies don’t ask about your income, are not licensed, and have poor customer ratings. They might even try to convince you to take out a bigger loan than you need. These high-risk loans come with hefty fees and high interest rates.
Alternatives
If you’ve been turned down by high risk payday loan lenders, there are other options available. One such option is to borrow from your local credit union, which can provide you with a small loan for up to $1,000. Such loans have lower interest rates and shorter repayment periods. In addition, you don’t pay interest on these loans – you simply pay a flat fee, which is equivalent to an unattractive interest rate. These loans can be approved relatively quickly if you’re a member of the credit union. However, it’s important to note that if you’re a non-member, you may experience delays in funding. Also, late payments can be reported to credit bureaus, which can negatively impact your credit score.
While payday loans can seem like a good option at first, they can easily get you into a cycle of debt and even damage your credit. They can even cause you to have to seek credit counseling services. For this reason, there are plenty of alternatives to high risk payday loan lenders available online. These loan options can give you the money you need quickly, without all of the stress and hassle that comes with payday loans.
