People think that having a bad credit rating will not qualify them for a loan. However, this isn’t usually the case at all. Nowadays, you can qualify for SMS loans that you can receive through text and get the funds that you need. However, are they the best option for you?
Applications can now be done online or in person, depending on your financiers. They can be offered by financiers or private lending companies that you saw on the internet. Transactions are fast where you just need to fill out some forms, and it’s going to be sent to the system right away. In about a minute or two, you can get notifications that the application has been approved or denied.
If you got approved, know that the interest rates are sky-high with these kinds of deals. On the flip side, you can always get the money deposited into your bank account within the day, and everything is simple. Read about them on sites like sms lån lav rente where you can get quick cash within a reasonable annual percentage rate.
What are your Options?
Everyone wants to experience a faster and more streamlined process, especially if they need the money right away. There’s no time to wait, and if some individuals don’t need it desperately, they wouldn’t apply to the loan sharks in the first place. Why are they called like that, you ask? Because most of these shady companies are preying on the needy.
These are the financing companies that may resort to blackmail, violence, and other threats just to get what they’ve loaned. Fortunately, not all title or payday loans are considered to be predatory lending.
Fortunately, you can still get licensed businesses that are collecting and operating within the bounds of the law, but the interest rates are extremely high. In this day and age, it pays to go to the bank because they can provide you with a tailored package, longer repayment terms, and reasonable costs, so you’ll have the chance to pay back what you borrowed.
In the meantime, here are some things that you need to know about these loans.
1. Exorbitant APR is Common
As mentioned, interest rates can shoot up from 400% to 500%, depending on the terms and amount that you initially requested. Common examples are the $100 that has a 15% rate that you need to pay back when your next pay stub arrives.
Sure, $15 might be such a small fee when you think about it. However, do this frequently and calculate the numbers where the APR can go up to 391%. This is a lot more than what the credit card companies are charging.
Know that it gets a lot worse in other states. Payday lenders may charge up to 652% on the amounts that they let their clients borrow. Charging $25 on top of a $100 loan in two weeks seems to be too much, but that’s what you’re usually going to get with these deals.
2. Hidden Fees are Too Much
Seen an advertisement and are interested in getting that deal? Well, think again because financiers are known to charge you with a lot of sneaky add-ons when it comes to closing the deal. You may be charged with processing, origination, brokerage, and application fees all at the same time.
If you’re not careful, you may end up with a third of what you’ve initially applied for, but you will have to pay 5x that amount. This is why reading your contract carefully is essential and ask questions before you sign that dotted line. Know the terms and conditions, and don’t just jump into the first one that you saw.
Having trouble navigating your agreement? Check out the resources online from government organizations and non-profits. They may also give you counseling services and financial education for free so you can make wiser decisions with your money.
3. Shorter Terms
One of the most challenging things about getting quick loans is their shorter repayment periods. You’re only given a few weeks to repay what you owe, which is difficult for many people. At times, they are forced to borrow from another payday lender, so that they can fulfill their promises to the old one. However, know that they are essentially borrowing $200 with a $250 payment.
This means that they will have to repay more than the $250 to the second financier on top of the 500% interest rates that they are getting. These practices are going to make individuals struggle, especially those who don’t have extra side hustles and are relying on their monthly paycheck to get by.
Shady practices are going to trap and hold many people into a vicious cycle of loans until they can’t afford them anymore. This is why you need to get alternatives, especially with SMS loans, because they can balloon to a few thousand dollars before you know it.
Basic Requirements for These Debts
-You Need to be at least 18 years old
-Have a bank account where the funds will be deposited
-Provide IDs and pay stubs or tax returns as income proof
Debts can be approved in less than an hour, and you will get a check minus the extra fees afterward. A pre-determined date and amount due is going to be sent to you through email, and this can be extended in just a few weeks.
As mentioned, they are extremely risky and are not worth it. Sure, it can boost your confidence and even be flattering when you find someone willing to work with you even if you have a poor credit rating. However, they charge an arm and leg for their services and financial products so avoid these sharks as much as possible.
Get a Personal Loan as an Alternative
The primary reason why so many people go to the bank and other larger financiers is that they offer reasonable interest rates and a longer term. They may also offer you a huge sum of money if they see that you’re capable of paying it back after they check your credit report and repayment history.
Consumer debts can be both secured and unsecured, and when you choose the first one, you need to put up collateral to lower your interest rates significantly. Valuable assets like jewelry, investment accounts, savings, retirement funds, cars, or your home are accepted. However, know that if you’re going to default on the agreement, the financial institution can seize the collateral to pay off your remaining balance.
Online lenders can offer personal loans as an alternative for getting quick cash. You might see a huge difference if you’re willing to wait for them rather than jumping at the opportunity to close deals with shady corporations.
For one, you’re not too stressed on the next payday because you’re able to meet the dues, and the payments are more manageable. You also have the option to repay everything in full once you have extra funds to spare. Just be sure that there are no prepayment penalties when you do this to save more money down the road.
With the rise of technology, it’s not that difficult to obtain financing today. You might get a response within 48 hours after the underwriter has determined that you’re eligible and when a hard credit check shows that you’ve never filed for bankruptcy or are late in paying your dues.
It’s highly recommended to use calculators when needed so you can determine the true cost of your loan. SMS types are convenient, but they are illegal in some countries. Get the ones that will help you increase your credit score and only borrow an amount that you can afford to return.
Also, most of the predatory lending won’t show up on the reports of the major credit bureaus, so even if you’re able to repay them in full, it won’t impact your rating in any way.