Bad Credit Score Not Preventing Consumers from Short Term Loan Approval

Your credit score can dictate the way in which you access loan facilities as well as the kind of terms you are offered for the loans. However, for one consumer, it seems that accessing short term loans is quite easy. When you are in bad credit, banks and other lenders shy away from offering you credit facilities. You are abandoned at a time when you actually need a credit facility. Payday loans are changing the way bad credit consumers have been previously perceived. 


There has been misconception that bad credit consumer cannot repay a loan substantially but this is being proven wrong. Actually that consumer can pay very high interest-rate loans like the cash advance or next payday loans offered by lenders. These loans attract an interest rate of about 400percent but this can stretch to as high as 750 percent or even higher. For example, one company Wonga, a payday leader is said to offer short term loans attracting interest rates as high 4000 percent. 


Wonga, a UK leading payday loan lender states that it will always tell you the full cost of cash advance loan repayment upfronts and there are not catches or extra costs. Yes! Wonga goes on to state that their services have a representative APR of 4214 % but this is an annualized measured, which takes into consideration a compounding theory.


The loans are intended to be repaid for between one day and one month and the short the period the higher the APRs. In the US, the payday loans APRs are relatively lower ranging about 750% on the higher side though some lenders may clock the 1000% APR mark. When the credit crisis hit many parts of the world from 2007, many consumers had borrowed heavily with multiple loans or large sized credit facilities. 


They did not anticipate that things would take a different twist of events. The financial institutions abandoned many consumers with bad credit but today, this scenario is changing as the lending companies make a comeback. The effects of delinquencies, bankruptcy, and foreclosures reflect on credit report for a long time. 


Although some of the consumers may have stabilized financially, the effects of the credit crisis still reflect in their credit reports. Payday loan lenders are now offering high interest rate loans, which are secured by a paycheck. The loans are easy to obtain and you can apply online. Because of the frustrations consumers have had whenever they visited banks to apply for loans, they have found good friends in lending which are the payday loan lenders.


These lenders seem to understand the needs of the underserved borrower and this is why they are preferred by many consumers.  Not only are payday lenders offering short term loans to the consumers but banks have also joined the market. Different banks are offer payday loans under different names for example, Wells Fargo offers Direct deposit advance, Guaranty Bank offers Easy advance while Bank of Oklahoma offers Fast loan. The bank payday loans attract an interest of about 250 to 300 percent APR.