Bad Credit Payday Cash Loans

One kind of bad credit loan that people should try to avoid as much as possible is a payday or check loan.

A bad credit payday cash or check loan is a short term high interest loan that a person agrees to pay off in the near future usually in a few weeks. There are several kinds of these loans available online and in the check cashing stores found in poorer neighborhoods of American cities. These loans are easy to get but they are usually a bad deal for the borrower.

Check loan

The most common of these loans is a check loan, to get a check loan a person writes a check for the amount of the loan plus interest to the lender. The lender then holds the check to a set day usually the borrower’s payday and cashes the check on that date. The idea is that the check will cover cost of the loan.

Payday loan

A variation of this concept is the payday loan in which a person takes out a high interest short term loan that he or she agrees to pay off on their next payday. Many check cashing stores make these loans to customers who will pay them off when they bring in their paychecks.

How these loans work online

The online variation of these loans works like this, a person goes online and signs up. They provide their bank account number and other information. The lender then wires the money to their account. The borrower agrees to have the lender take the principal of the loan and the interest out of his account electronically on a set date. Just as the check loan uses the check for collateral the electronic loan uses the borrower’s own bank account as collateral.

Strict terms and high interest for bad credit payday cash loans

Bad credit cash payday loans or check loans are a very bad deal for borrowers because of the high interest and strict terms. You have to pay these loans off quickly because the interest is so high. One popular online payday loan site offers 391%. This means that the amount owed to the creditor can quickly triple or double.

There are some advantages to these loans they are easy to get and a person can quickly get money. Many people rely on such loans in emergency situations to cover urgent needs such as rent, mortgage payments and utility or medical bills.

A person should only take out of these loans when all other alternatives have been exhausted. In most situations, it would be better to utilize credit cards to pay bills because the interest on credit cards is lower. Unlike bad credit cash payday loans credit cards can be paid off in small amounts over a longer period of time.

Payday and check loans are easy to get because the companies that issue them can make a lot of money off of them. Average people should avoid these loans because they are a great deal for the lenders but a lousy deal for the borrower.