However, the APR rate does not show the entire picture. Short-term lending is always expensive especially when the amount is ridiculously small. Imagine running a business with just a couple of employees. You will have to pay your employees, buy or rent a workplace, make necessary payments to government agencies for regulating your business, and spend money on advertising and marketing the business. With all these costs adding up to the value of service of product, there is going to be $10 margin for each unit to cover up the costs. The same thing happens when you borrow $200 from a payday loan lender. The lender charging $10 for the amount borrowed is actually paying for a place to work, for someone to process your loan, and for someone to receive the payments. This is the bare minimal setup for a payday loan lender, ignoring all the fees and marketing costs.
Suppose that you are paying $10 for loan with repayment period set at two weeks. If $10 makes 5% of the amount borrowed, annual charge (APR) will 130% without compounding. This seems massive but you have to understand that the APR is for the same money rolled over 26 times.
In the previous example, we did not add any interest. The 130% APR was only because of fixed fee charged for a loan issued for two weeks. This is one of the major reasons that APR goes that high- the fixed fee.
Usually people are confused since they are used to bank loans. They see the APR in comparisons to bank loan without considering the nature of both loans. Payday loans are personal loans with a short-term commitment. Lenders will only lend a small amount, usually one third of your pay.
As far as the big picture goes, the pay day loan industry does not have an exceedingly high complaint ratio. One national pay day loan provider states that it’s written customer complaint occurrence is less than 4%, which conversely could be interpreted as a 96% satisfaction rate, depending on who is quoting the statistics.
In the financial products industry and specifically with pay day loan products, one may think that the most common consumer complaints fall directly in line with media reports and revolve around high interest rates, predatory lending practices, collection harassment, or a myriad of other potential complaints, however the actual type of complaints that have been filed with the Better Business Bureau, Federal Trade Commission and various States Attorney General’s offices paint a different picture indeed.
How do you get the cash you need when your credit is less than perfect?
Getting the best loan with bad credit in 2016 means finding a lender who is transparent about rates and fees, flexible on terms, and willing to view you as more than your credit score. It also means avoiding predatory lenders and common scams that can keep you trapped in a cycle of debt. A loan won’t solve all of your problems, but when used properly, good loan can be the tool you need to get a handle on your finances, and improve your credit. We did some research to find some great options that help. The providers below we found to be the most transparent in the bad credit category. You can browse these lenders or read on for our research on each provider.
Top Picks for the Best Loans with Bad Credit
We’ve researched companies that specialize in lending to customers who may have some blemishes on their credit report. Here’s who came out on top in our search for the best bad credit personal loans:
- Best Unsecured Bad Credit Loans: cashnowy
- Best Secured Bad Credit Loans: cashnowy
- Best Peer-to-Peer Bad Credit Loans: cashnowy
One note before going forward: Bad credit means different things to different lenders. Some lenders won’t consider your application if you have a credit score below a certain number, while others will make it a smaller part of their lending decisions. For the purposes of this article, I focus on lenders who will make loans to customers with credit scores under 640. This score is considered “average” by most lenders, but lending criteria tightens considerably below this mark.
ไม่มีความคิดเห็น:
แสดงความคิดเห็น