An immediate cash loan may be necessary to meet the cost of an emergency bill, such as fixing the car or paying the rent. The problem is that a poor credit history makes it more difficult to borrow money as it shows on a credit report for a period of 7 years. In a concerted effort to protect their balance sheets from further bad debt, traditional bank lenders perform credit scoring in order to assess the likelihood of the borrower defaulting on the agreement. Whilst the APR will be higher, specialist lenders now offer loans for bad credit customers. Credit unions, pawn shops and payday loan lenders provide a source of fast emergency cash.
Loans for Bad Credit Customers from a Pawnbroker
Pawn shops have been offering immediate cash loans since the 16th century, but rising gold prices has meant that business has rarely been better for them. Customers can get a quick cash advance that is secured on an item of value, such as gold, watches, silver, electrical equipment or collectibles. Once the item has been appraised, a maximum pawnbroker loan value will be determined. The borrower provides satisfactory identification and the lender offers quick same day cash and a receipt for the transaction. The item is redeemed by paying off the debt before the end of the date specified in the contract. If this doesn’t happen, the collateral will be sold to recover the loan.
Fast Cash Advance Payday Loans
Customers with a poor credit history regularly turn to payday lenders for fast emergency cash. A fast cash advance payday loan will be offered to U.S. customers who are over 18 years of age and have a full-time job paying at least $1,000 a month. It is also necessary to have a valid checking account and be able to provide 2 forms of identification. The borrower provides the lender with a postdated check that is set to clear on payday. Once agreed, a quick cash advance will reach the customer’s bank account within a maximum of 24 hours. If the application is made in the morning, the money will reach the client’s account within a few hours.
Quick Cash Advance from a Credit Union
Unlike other bad credit lenders, credit unions offer immediate cash loans to members, not customers. People join on the basis of a shared interest, such as employment, religion or locality. They are a non profit organisation that works with its members to ensure that a quick same day loan is affordable. Whilst the cost of borrowing money is similar to a fast cash advance payday loan, credit unions tend to be more understanding in the event that the customer experiences difficulty repaying the debt.
The Cost of Fast Emergency Cash
The absence of credit scoring means that bad credit lenders take on a greater risk. The majority of customers have an adverse credit history so the APR is higher to account for the higher risk of the borrower defaulting. The short borrowing term also means that the lender needs to recover their administrative costs over a minimal timeframe. Whilst rates vary between lenders, a quick cash advance for $1000 will mean that up to $1250 will need to be repaid just a month later. This will leave less money to pay the bills in future months and may lead to the need for more money in the near future.
Unable to Repay a Quick Same Day Loan
Financially stretched customers may find it difficult to punctually repay an immediate cash loan. If this is the case, talk to the lender as soon as possible to see if they are able to give the customer more time to clear the balance. Subject to state rules, it may be possible to extend the borrowing term of a fast cash advance payday loan. Pawnbroker loans can be also be extended, provided that the collateral has a sufficient value. Interest continues to accrue and this could actually worsen money problems. Credit unions each have their own rules so it will be necessary to consult their financial officer to find out more.