Instant Loan With Bad Credit

Getting an instant loan with bad credit is much easier than most people think because of the large number of lenders that make such loans.

Bad credit is no barrier to getting an instant loan because most firms that make such loans base their decisions on cash flow. This means they make a loan decision based on the amount of cash you have available now or will have available in the near future.

One way instant lenders determine how much cash flow a person has is to look at their bank statement. They base the amount they will lend on the amount of money that’s been run through the bank account. Another way they determine if somebody is eligible for an instant loan is to ask for proof of a job. The lender then bases the loan amount on the amount of the person’s pay. 

Bad credit can lead to high interest

One reason why many lenders want to make instant loans to people with bad credit is they can charge such people a very high interest rate. The lenders charge a much higher interest rate because they are taking a bigger risk by lending to such people. Generally, in lending the rule is the higher the risk associated with a loan, the higher the interest rate charged.

How an instant loan is paid back 

Another reason why lenders are willing to make instant loans to persons with bad credit is the short payback period. Generally instant lenders want the loan paid back quickly usually in a few weeks or a month. Most of the instant lenders add a penalty or a fee to an instant loan if it isn’t paid back within a short period time. Others will have the person take out a loan extension which usually involves the payment of a fee.

The fees and extra interest can quickly add up with instant loans. In the worst case scenario they can exceed the amount of the initial loan. Many people quickly get in over their head by taking out instant loans that they can’t pay back.

Where to get an instant loan

There are lots of lenders that make instant loans in most communities. Payday lenders, check cashing stores and pawn shops often make instant loans. Some banks and major retailers are also moving into this market because it’s a very high profit industry.

Generally, the variety and amounts of instant loans in an area is determined by local and state law. Many states have laws limiting the interest and terms on instant loans. In some areas, instant loans may be banned entirely.

Instant loans examined

People should remember that instant loans are designed as an emergency source of funds that a person is supposed to use on a limited basis in order to get through tight financial situations. A good example of such a situation would be to cover a rent or bill payment or to cover the costs of an unforeseen emergency such as a doctor bill.

Instant loans should never be used to cover day to day expenses. Nor should they be used as a substitute for income from a job or government benefit.