When you didn’t manage your money so well as you travelled and you return home to find the debts have mounted and unexpected bills are arriving, many people look for a quick fix. Unfortunately, any quick fix usually comes with a cost, and the eventual cost can dramatically outweigh the initial benefit.
The Bad Return Home – Are Cash Loans An Answer?
There’s no doubt that a good credit record is almost essential if you want to secure a good loan arrangement, with a lower interest rate and fees. So, it might come as a surprise, that is actually possible to be approved for a loan, even with a poor credit score. The catch is, bad credit cash loans are generally a lot more expensive – either in the interest they charge, the fees attached, the penalties that can be applied, or a combination of all three.
Many small cash loans involve more risk for the lender, and the bigger the risk they’re potentially taking, the more they charge in interest and/or fees.
The Bad Return Home – Are Cash Loans An Answer?
Even secured loans to applicants with a bad credit score carry a risk as lenders don’t want to hassle and expense of repossessing and liquidating the secured assets.
So, if it sounds like a good deal, check the fine print. Finance companies that offer bad credit loans are generally very good at making their loans sound easy, stress-free and affordable. Their websites are friendly and cheerful, and filled with smile-filled images and testimonials from ‘satisfied customers’. They may even suggest that their interest rates are low and comparable to regular loans.
The catch, however, often comes in the associated fees, charges and penalties. This is where the comparison rate comes in, and invariably, the higher the comparison rate, the harder it will be to find on a website.
As tempting as bad credit cash loans can be, a better alternative is to tackle the root-cause of the problem – the poor credit score. There are steps to improve it at CreditSmart.
Late payments and defaults are the main causes of poor credit scores, so be sure to pay everything off or set up auto-payments before you travel. Whenever you fail to make a scheduled repayment on a loan or credit card, your credit provider is likely to notify the credit reporting agencies such as Experian. That lapse is then entered onto your credit report where it also affects your credit score – and it stays on your record for 24 months.
When making an assessment of your creditworthiness, most lenders will tend to place more weight on your recent credit history. So a missed payment from before your long travels may impact an application less than, for example, a run of missed payments after you return.
By making an effort to keep up-to-date with all your repayments, you should see your credit score gradually increase, and your ability to secure a more affordable loan with a much lower comparison rate improve.
Getting your credit score up, and improving your creditworthiness can take time, but in the long run, can also save a lot of money and a lot of stress.