Many people who are in most need of small short-term loans unfortunately have bad credit scores. In response to this problem, payday lenders have cropped up everywhere, offering loans to those whom others do not wish to lend to. If you need a 250 loan now, bad credit will not stand in your way. But you may want to consider a few things before you take advantage of payday loan companies eager to give you money today– there are reasons why they are so eager to lend to you, even though your credit score is poor.
Payday loans are highly regulated in the United States in many different states. Eighteen states do not allow them at all, and others have strict laws regulating loan limits, number of loans allows to one person each year, APR disclosures, etc. So the exact cost of a 250 payday loan will differ depending on where you live and what lender you are looking at. But a representative cost of a two-week loan for $250 could be about $42 or 445% APR. The real danger, however, is in being unable to pay back the loan in time. If you are late, you must renew the loan, incurring more fees. Many people get caught in a cycle of high-interest debt, rolling over their payday loans and paying super-high interest rates for way too long.
If you are not in desperate need of money today, or if you have another way of getting the money you need, it would probably be preferable to avoid a 250 dollar loan from a payday or check advance company. Many people may feel that they do not have any other options, but this is not true. Consider the following options before you commit to a payday loan:
- a small personal loan from a credit union or bank, which may have a lower interest rate and more favorable pay-back terms
- an overdraft line of credit attached to your checking account, which could help you avoid overdraft fees for bounced checks
- a credit card advance may be expensive, but probably still less than a payday loan.
- a true paycheck advance from your employer
- negotiating a pay plan with your creditors
- selling something you own
- picking up extra hours at work or a part-time or temporary job
- a loan from a family member or friend, as long as it’s put in writing and you fully intend to pay it back in a defined time period.
Bad credit won’t stop you from getting a $250 loan, but hopefully pursuing a better option will!