What Loans Are Easiest To Acquire?
Payday loan comes in many names -- payday advance, cash advance loans, post-dated check loans, and deferred deposit loans -- just to name some. It’s one of the most commonly used credit nowadays simply because of the ease and convenience it provides.
Almost anyone can take advantage of the loan as long as they can provide a stable source of income. Aside from the minimal requirements, the loan application process is simple and quick and basically, it goes like this: the borrower fill out an application form with personal and financial details, request for a loan amount, wait for the verification and lender’s decision, and receive the cash in person or via bank deposit.
Because of the fast loan procedure, a payday loan is beneficial when you need quick financial relief; however, it’s not always the best option. In fact, it’s not even a good alternative when you need cash and should be only used as a last resort.
What You Need To Know
Payday loans, by nature, are expensive. There’s no need for any collateral or even a good credit remark, thus making it risky for the lender. Therefore, to compensate for all these risks, the loan provider applies a very expensive interest rate to the loan. To make matters worse, you’ll have to give it back in one lump sum in as fast as two weeks or on your next paycheck, depending on the agreed repayment term.
Some borrowers who find it hard to settle the loan back on time ask for a “rollover” or loan extension. While it’s possible to extend the loan’s due date, it means paying for additional fees, thus making the loan even more expensive. As a result, many debtors fall into a vicious cycle of debt. Therefore, before you get a payday loan, find out if you can afford the loan repayment first. Also, it’ll be worth it if you spend extra time shopping and comparing various payday loan providers first until you found the one that offers the best rate.
The credit score plays a major role in the future loan application that’s why most borrowers are exerting effort to increase it. One of the common strategies used to build or boost a credit rating is by paying off debt, which, in fact, can really help improve a credit remark.
Things To Consider When Applying for A Loan
However, this still depends on how you pay the loan. For instance, when you’ve used your credit card and you decided to settle it before its due date, it can be very advantageous on your part because it lowers the interest you pay and it reduces the risk of paying late, which can result to additional charges. In addition, when you choose to pay before your current billing cycle expires, it may present a lower card utilization, thus increasing your credit remark.
Meanwhile, if you do this on other types of debt, such as a student loan or a mortgage, it won’t affect your credit rating at all. Worse, it can even result in penalty charges for paying the loan earlier than its due date. Therefore, if you’re planning to pay the loan in advance or even before you get a credit, read the fine prints and check out what it says about early repayment.
Will Debt Settlement Affect Your Credit Score?
The timing of the loan may or may not affect your credit score; however, dealing with your past debts is another issue. Not only is it difficult to settle, but it can also reduce your credit remark. Therefore, it’s important that you negotiate with the lender in case you think you cannot repay the original amount. Some lending facilities may agree to reduce the interest rate or waive other fees to satisfy your debt and the only way to find out if this is allowed is to ask the loan provider directly. Nonetheless, every action you make is recorded in your credit report and if you’re planning to build and maintain a good credit rating, just be sure to settle your debts on the agreed repayment period.