Payday Loans

3 Reasons Why You Should Never Borrow A Cash Advance With Bad Credit

It is very easy to obtain a cash advance with bad credit, as there are payday loan stores available at almost every nook and corner of the United States of America. In fact, if you cannot find a local payday loan store in your neighborhood, you can get one on Internet at just a click of your mouse. But, just because easy loans are available out there, it does not necessarily mean that you should get it. Even if you are in need of extra cash urgently, payday lending does not make the right financing option. Here are the three top reasons why you should always avoid borrowing from payday lenders and look for better, cheaper and safer alternatives.

It Offers Only A Temporary Solution

A cash advance with bad credit offers a quick but very temporary solution. A payday loan company lends you the money you need through a very fast and quick process that does not require checking your credit score, but they require you to pay back the money thus borrowed within a very short period of time that usually ranges from just two to four weeks. Though your cash problem is solved temporarily, but when the due date comes closer, you find yourself into a more serious debt problem – now, you quickly need a much larger amount of cash. This forces you to borrow another payday loan. In fact, it is very common to find people who keep on borrowing a new payday cash advance in order to pay off a previous one. There are even people with multiple payday loan accounts outstanding in their name. Considering the extremely high cost associated with these loans, it often becomes very difficult for people with bad credit and limited income to get rid of the debt trap caused by payday loans.

It Pushes You Toward A Deeper Debt Trouble

As it is quite evident from the above explanation, a cash advance with bad credit can actually push you toward a much deeper financial crisis, where you will end up having a much higher amount of debts outstanding in your name. Since you have limited income and your credit score is also damaged, it will almost be impossible for you to repay the rapidly growing payday debts in a timely manner. Missing the due date for these loans result in your debts growing much faster, as hefty penalty charges are added to your account; besides that, you also become liable to pay additional interested for every single day that passes after the originally scheduled due date.

It Further Damages Your Credit Score

In order to get a clear picture on how a cash advance with bad credit can further damage your credit score to an extent that is almost irreparable, you would love to go through this example – suppose, you borrow a cash advance of $500 initially and the due date is just two weeks away, when you are required to pay back $800 (including interest and other charges). You are probably going to spend the $500 you have borrowed, and on the pay day, you will get the same salary that you get every month. After meeting the regular monthly obligations, you will probably be not left with enough funds to ensure timely repayment of this payday loan. In that case, you would like to borrow a new quick and easy payday cash advance of $800 that will require you to pay back around $1200 on the next pay day. The debt balance thus keeps on increasing and you eventually end up borrowing multiple payday loans (because you usually cannot borrow more than $1000 from one lender). The debts become higher but you have no money to repay the same. Payment of debt on time, debt to credit ratio, overall debt balance and how quickly you obtain new credit are some of the major factors that are taken into account to determine your credit score. Since

you will have a poor record on all these factors, your credit report will severely get damaged.

Overall, these three reasons are probably sufficient enough to let you understand why you should never borrow a cash advance with bad credit. If you are having difficulty in paying off your existing debts, you should look out for conventional solutions that are much safer, such as refinancing or negotiating a more affordable repayment plan with your lenders.

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