Have you been turned down for an auto loan, personal loan or mortgage? There are many reasons why banks deny loans. One of the biggest is that you have too much accumulated debt.
How do you know if you are high risk? Banks look for key warning signs such as a history of late payments, credit cards that are maxed out and low bank account balances. Those who live paycheck to paycheck are risky from a bank’s point of view. There is another startling trend. Many consider older Americans to be high risk. Take Citibank for instance, it is their company policy that they not accept credit card applications from those older than 75.
Video: What is a Credit Crunch?
Getting a Loan with Bad Credit
Those with bad credit still have available options. Debt settlement programs can help. Payday loans are riskier, but can help you get a small amount of cash in a hurry if you are desperate. A better option is a bad credit loan. The bad credit loan process is similar to applying for any loan. The biggest difference is that a loan to a high-risk person will have a steeper interest rate, but often times these rates are still lower than credit card interest rates.
High-risk loan companies often charge a flat application fee. If you are denied, some companies will refund the fee, but not everyone does. Pay close attention to the terms and check with the Better Business Bureau to find out if the company is legit.
Another trap to avoid are companies who offer to find banks that will accept your application. These companies promise free searches, but when they have results, they charge you a fee.
Are Payday Loans Worth It?
Payday Loans occur when you request an advance of the money you would receive on your payday. Companies specializing in payday loans charge fees for this service. Plus, you must pay the money back, including fees and interest, as soon as you receive your next paycheck.
Due to usury laws, not every state allows payday loans. In Washington, D.C., payday lenders cannot charge more than 24 percent interest. In Georgia, the practice is illegal. New Mexico caps fees at $15.50 for every $100 and the loan length can be extended without additional fees or interest.
Research payday loans carefully. Access to your money is wonderful when you have an urgent bill to pay. However, when it comes time to pay the company back, with fees and interest rates, you may be paying far more than you borrowed. In some cases, you can be paying more than double the original loan amount.
Understanding how Debt Settlement Works
With a debt settlement plan, you enroll with a specialized company to help renegotiate your debt. Those companies will work with credit card companies to help reduce the amount you owe. For example, say you owe $25,000 in credit card debt. A debt settlement company will talk to the credit card company and tell them you are struggling to pay and may face bankruptcy. They negotiate with the credit card company to get that balance lowered, typically by 10 to 20 percent.
Debt settlement keeps you from filing bankruptcy. The credit card company still gets some of the money they are owed rather than risking a bigger loss. Remember that a debt settlement company profits. Most companies charge between 10 and 20 percent of your total debt, should you agree to use their services.
Video: DIY Debt Negotiation
When choosing your high-risk loan, be careful to explore your options. These companies want your business; so do not be afraid to negotiate terms that work best for your situation.
Several Bad Credit Personal Loan Companies:
Money Now USA – 1-877-510-5000
My Cash Now – 1-800-485-0818
Payday Max – 1-866-292-3925 (Loan Approval) or 1-877-937-3729 (Customer Service)
Payday Loans occur when you request an advance of the money you would receive on your payday. Companies specializing in