Loans To Avoid
When you are in need of a loan, any option that comes your way may seem like a good one. This is especially true if you have a bad credit score, and your options are limited by it. However, there are several types of loans that you should try to avoid if you can. These loans may end up costing you more money than you expect, and can even put you in a worse financial situation.
- Payday Loans – These are some of the worst loans out there. Payday Loans are designed to be short term, small amount loans, usually meant for people to use while waiting for their next paycheck. If you need money now, but you don’t get paid for a few weeks, it can seem like an attractive option. However, Payday Loans typically have very high interest rates, making them very risky. If you don’t pay back your loan right away, the debt is quickly going to build up very high, and you may find yourself in some trouble if you are not careful. The only time we would recommend getting a Payday Loan is if you have a solid plan in place to pay it back, and you are sure you can stick to it. However even then, you can probably find a better option.
- Doorstep Loan – Doorstep Loans are a notch above Payday Loans, but they are still not great. With a Doorstep Loan you get a representative of the lending agency to come to your door. This agent will deliver the money, come back to collect payments, and is available to discuss any issues you are having with your finances. While the personal touch is a good thing, these loans are essentially Payday loans and run the same risks. Keep this in mind when considering a Doorstep Loan, and decide if the personal touch is worth the other risks.
- Guarantor Loans – One of the great things about Guarantor Loans is that you get much better interest rates. However, this is because you will not be using your own credit score. Instead you find someone to vouch for you, and they use their good credit score to secure you a decent loan. While this sounds like a good deal, keep in mind that if you fail to meet your payments, the burden of the loan will shift to the guarantor. You will then be putting a strain on a close relationship of yours, and this is never good. Relationships are much more important than money, so think carefully before getting a Guarantor Loan, as you don’t want to ruin a good one.
There are plenty of loan options out there for people with bad credit ratings, but not all of them are good. Make sure that you do your research before you agree to anything, and that you know what you are getting into. Just because you may need money, don’t let that cloud your judgment and put you into a situation that ends up making things worse. If you can think things over carefully, you should be able to find yourself a decent loan before long.