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People need savings and emergency funds to cover unexpected expenses. It could be because of sudden hospital bills, major home repairs, or last-minute travel. Losing a job also requires immediate financial assistance.
However, most people don’t have savings or funds intended for unforeseen expenses. Hence, applying for emergency cash loans seems to be the best available option. Emergency cash loans are short-term loans you can easily apply for in lending institutions, both traditional and online.
Upon applying for a cash loan, lending companies will run a credit check for your loan eligibility. If the results show that your credit score is low, it means that you’ll have fewer options for getting an application approved. However, there are particular loans available for these borrowers. Written below are details that can help you know more about emergency cash loans for bad credit.
What is bad credit?
To understand bad credit, you should first know about the credit score. A credit score is a numerical value that will determine your creditworthiness for borrowing money. It’s a result of the calculation and review of your credit report, payment history, the amount you owed from other companies, and many others.
A FICO score is a credit scoring standard used by various lending companies in the US. It’ll make use of your credit information to generate a just and precise result. The score ranges from 300 to 850, with a score below 670 considered a bad credit score. However, those with a score of 800 and above will receive exceptional ratings and the best rate from lending companies.
A Vantage Score is another credit score model that has three different models. However, the most recent one introduced to the lending companies and consumers is VantageScore 4.0. It has the same score range with FICO. It also has the same goal in providing scores to consumers and lenders to check the eligibility in applying for a loan.
Therefore, you'll have bad credit if your credit score doesn’t reach the required mark of a good rating from one of these credit score models. However, many lending companies still offer quick cash loans for bad credit, which can be a great option if you need money.
Types of Quick Cash Loans for Bad Credit
Applying for new credit when you have bad credit can be difficult. You’ll have less a chance of getting your loan approved. Moreover, available options may be limited, with higher interest rates and more restrictions than those with good credit standing.
If you’re in a situation and badly need the money, these are the loan options available for you.
Payday Loans
A payday loan is a short-term and unsecured personal loan. This means that it doesn’t require any collateral before you’ll get your borrowed funds. The loan will be due in two to four weeks (or more) after receiving the borrowed amount. Moreover, interest rates vary and can be quite high.
The loan duration will depend on the borrower’s payday cheque or the day when the income is generated. Repaying the borrowed funds can be done by authorizing the lender to access the borrower’s bank account electronically. Hence, the lender can deduct the borrowed funds plus interest and additional fees (if there’s any) on the due date.
However, if the borrower needs a date extension, they should contact the lending company before the due date to discuss another payment arrangement. Lenders may also provide other modes of repayment for both parties' convenience so that late or no payment can be avoided.
Cash Advance Loans
A cash advance loan is similar to a payday loan. However, some lenders specifically offer this option for borrowers with bad credit. The application process is easy, and you would immediately know if your application is approved or denied.
Like payday loans, cash advance loans are also more expensive, with a higher loan interest rate. To process a repayment with the cash advance loan, the borrower will write a postdated check.
A postdated check is a check dated on the upcoming payday with the total repayment amount. The lender will cash the check on the due date. Cash advance loans are expensive for a borrower with bad credit. However, if you badly need urgent financial assistance, a cash advance loan will still be a good option.
Car Title Loan
A car title loan is a short-term loan that requires collateral by using the clear title of your vehicle. It’s an expensive type of loan with higher interest rates. Even if your car doesn’t have a clear title, as long as you have equity, many lenders will offer you this type of loan.
Car title loans have a duration of 15 to 30 days. The amount of title loans usually range from 25% to 50% of your car’s market value. Upon application, you’ll present your car, a clear title, a valid ID, car insurance, and other essential documents needed by the lending companies to proceed with your loan application.
Before you apply for this loan, be sure to read and review the loan terms and conditions. Ask relevant questions to understand every detail of the loan. Get the quoted amount for the borrowed funds and the amount for the interest and additional fees. With this, you would know the actual amount you’ll need to pay on the due date.
Car title loans provide three options to repay the credit for the borrowers. It can be paid personally in a loan storefront. The borrower can also use the lending company's online system to process repayment. Automated payment systems are also available for borrowers to authorize lenders to directly deduct an amount on the due date from your account.
Takeaway
People should consider savings as a necessity. Savings help you during tough financial crises in your life. However, not everyone can save. For those without savings, emergency cash loans are one available option. These aren’t the best choices, but if none is at hand, applying for an emergency cash loan can be a life-saver. Always remember the things discussed above if you consider applying for one in the future.
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