There are times when life throws difficult situations to you. You might have planned everything with investments, insurances, retirement plans, and monthly budgets but life can be unpredictable. In those testing times, emergency loans help you tackle those. In cases of medical emergencies, vehicle repairs after a sudden accident, home repairs after a natural calamity or any unplanned trip with friends, we require fast money.
Personal loans are the best option to get fast money during difficult times. However, people with a bad credit score might not get approval for personal loans. There are several alternatives for personal loans for people with a zero or bad credit score. Here, is a list of several alternative online payday loans for bad credit.
What Do You Mean by Bad Credit Loans?
For writing a decent article about payday loans, you need to be aware of the idea of bad credit loans. If you have a bad or poor credit score, then you can opt for online payday loans for those with a bad credit score. The lenders check the credit history and the credit score of the borrower before lending them the money. The credit score of an individual is checked as the high credit score decreases the chances of not clearing the monthly amount for the loan. Hence, it decreases the worries of the lender.
This explains why people with zero or low credit scores have difficulties getting a loan. The lenders do not provide the facility of loans to people with low credit scores. This is where online payday loans for bad credit comes into play.
4 Kinds of Loans for People with Low or Bad Credit
There are several kinds of online payday loans for bad credit if you are struggling with zero or bad credit scores. You need to go through all the scheme related documents so you are confident about choosing the best kind of online payday loans for bad credit which will suit all your criteria and requirements. Some of the best options for online payday loans for bad credit are listed below:
1. Credit Card Cash Withdrawal
Many people do not know that credit card offers instant cash in case of emergencies. Credit card cash withdrawal or credit card cash advance lets the users of the credit cards withdraw cash from the nearest ATM. The process is fairly simple as you can simply withdraw cash from the ATM as you do with your regular debit card.
The limit of money which can be borrowed using the credit card varies from card to card. The biggest advantage of this kind of online payday loans for bad credit is that it is instantaneous. One more big advantage is that this kind of loan does not directly affect your credit score. There is no documentation required for this loan.
Also, there are several loan limits based on your previous repayment history regarding loans. There are some drawbacks however, the interest rates are quite high. Also, the interest is charged from day one itself.
2. Payday Loans
If you have to name one of the online payday loans for bad credit which comes handy during times of financial difficulties, it is payday loans. In India, several digital moneylenders offer payday loans, and hence, they are very easy to get hold of. This is the best kind of loan for employees with a stable monthly salary with a bad credit score and in need of some emergency cash.
The emergency needs can be of any kind like paying the regular bills or just meeting the household necessities. On the positive side, the loan does not need a guarantor or collateral. The loan approval is pretty quick. The borrower, however, needs to issue a post-dated cheque to avail of the loan which acts as a security that the lender requires. The cheque consists of the deposit amount along with the interest. You can get this loan even if you have a bad credit score or poor credit history.
3. Equity Home Loan
Another better online payday loans for bad credit are home equity loans. These are similar to home loans and here too your home acts as your collateral. The eligible amount to be borrowed from the home loan is the total valuation of your home minus the amount which is yet to be paid for the home loan.
As the home acts as the collateral, the lender is not much concerned with the poor credit score. It is fairly easy to get this kind of loan. This helps to use your asset for the sudden need for money. This loan helps you borrow a huge amount of money in a time of crisis. The fixed interest rate for the whole time in which the loan lasts. However, there are no tax benefits that can be garnered with these loans.
4. Loans against Insurance Policies
You can avail this kind of loan during an emergency. Similar to a home equity loan, this loan does need a high credit score. In place of your own home, in this, you can place several other insurance policies like moneyback plans and traditional endowment plans. There are several advantages like they are approved within seven days.
The loan is sanctioned easily even if you have a really low credit score. It has a lower interest rate than most other secured loans. The only drawback of this kind of loan is that if the payment falters, your whole retirement fund can be messed.
These online payday loans for bad credit sure look enticing but you have to keep in mind that the interest rate of these is much higher than the usual loans. Therefore, you are advised to save funds which will help you during times of crisis. Also, you should make sure that you have read all the documents and carefully studied all the details of it.
You should choose the most suitable loan which is flexible and affordable for your convenience. Also, you can look at ways to boost the credit score of yours to get sanctioned for loans at a lower interest rate.
Interesting related article: “What is a Payday Loan?”