NO savings? BAD credit? NO worries!
Most residents in New Zealand would love to have a savings account for when they have an emergency and they need cash in a hurry.
Unfortunately for many people having any form of savings account is out of the question and the money that they have has to be stretched to pay for bills and to pay for day to day expenses.
If you have existing debt or you owe multiple creditors money and you are struggling to make the payments on your bills on time this could negatively impact your credit score and make it much more difficult to apply for a loan in the future.
Financial solutions for those that have Bad credit
Bad credit and blacklisted loans were designed especially for those clients that are struggling financially and have had their application declined at traditional banks. Bad credit loans may have stricter terms because they are already seen as a higher risk to lend money too and clients may not have any other options when it comes to borrowing money.
The lender will charge you a higher interest rate depending on how bad your credit score is and what payments you have defaulted against in the past.
Your credit report is a record of your financial history and includes payments on accounts or payments that are still outstanding. If you have a bad credit score you will be charged a much higher interest rate than a client that has a good credit score.
Types of bad credit loans that you can apply for
The two main types of bad credit loans that you can apply for include secured and unsecured loans.
Unsecured bad credit loans
An unsecured loan means that you will be charged a higher interest rate than on a regular personal loan and you will have access to less funding. You can apply for an unsecured bad credit loan online without needing to provide any type of collateral against the loan.
Once your loan application has been approved, you will need to sign a contract that holds you responsible to repay the loan. Most bad credit loans require you to set up a direct debit that will run automatically each pay cycle. This gives the lender peace of mind that you are less likely to miss a loan repayment.
If you don’t make payments on your loan you may be charged late fees and other extra charges
Secured bad credit loans
Applying for a secured bad credit loan allows you access to more money at a much more favourable interest rate. In order to apply, you will need to provide an item of collateral that is of greater value than the loan amount.
The collateral can be anything of value that you own including your property, an expensive item of jewellery or even your vehicle provided it is fully paid off. The collateral is used to secure your quick cash loan.
If you don’t make regular payments or if you default on your loan you may be at risk of having your collateral seized in order to cover the loan payments, this makes this option very risky if you are already having trouble managing your money.
Payday loans are secured loans
Another option for those with bad credit is a payday loan although you aren’t putting up any form of collateral your loan is still secured by your paycheck. The loan amount will be debited directly from your account on your next payday.
There are many different lenders that offer online loans but you need to make sure you understand all the terms and conditions involved when it comes to your loan contract.
When you are desperate for money and you don’t feel like you have many other options you may end up agreeing to terms that will affect your financial future for years to come and put you in a worse position than you were previously.
Know your credit score
It is very important to request a copy of your credit report before applying for a loan. You need to make sure that all the information listed on your credit report is correct. If there are any incorrect entries you will need to have them rectified before you apply for a loan.
Advantages of applying for a bad credit loan
Your credit score will determine how much you will be charged and how strict the terms of the loan will be. Some bad credit loans allow you to use an item of collateral as security.
These loan types don’t usually worry too much about your credit score as your loan is secured and if you don’t pay they will sell your collateral in order to get the money that you owe them.
If you apply for a bad credit or payday loan and you stick to the loan terms this will have a positive impact on your credit score.
Benefits of bad credit loans include:
- You can use them to improve your credit score if you make payments on time
- This can help you become a lower risk client and qualify for better terms in the future
- It is easy to apply online and you will receive an outcome quickly
- You won’t be charged an application fee to apply
Debt solutions when you need a helping hand
A bad credit loan is ideal if you really need money for an emergency in New Zealand because you can obtain it quickly through an online loan application. If you need the money you will probably agree to any terms just so that you can see the light at the end of the tunnel.
Lenders realize that you might be desperate so it is important to shop around and consider all your options carefully before signing anything. The most lender now days offer bad credit loans and with so many lenders to choose from, finding the loan you need is becoming more difficult.
Check that the lender you use is a registered credit provider and make sure that they follow all the rules and regulations set out by the New Zealand government. A bad credit loan can seem like a quick fix to your financial problems but you should consider all your long and short-term loan options and only apply if you are sure you will be able to pay back the loan.
If you are can’t pay back the loan you will only end up pushing yourself further into worse debt.