This post is also available in: Español
It’s hard to fathom but a huge percentage of are unable to get a credit card or a loan from a bank due to subprime credit scores. Almost half of the people with a credit score under 680 are rejected when they’re looking for new lines of credit. And 44% of all Americans are unable to cover $400 emergency expense. Because of this online payday loans for bad credit at payday depot can be a lifeline in emergencies.
For a lot of people, a short-term loan can be the only solution. Especially if you have very bad credit according to Nowloan, the top lender matching service in the UK.
Why This Matters To Me
When I moved to the United States 11 years ago, I was forced to start from scratch with no credit history. My family lived paycheck to paycheck for years, always in fear of what would happen if an emergency occurred and we were faced with a big expense. With no savings to our name, a financial emergency – like damage to our home or the need to repair our only car – would have devastated us. This is the reality for many families and even more so for many Hispanics.
The Financial Threat
While a short-term loan is currently a viable option for many low-income families, a group of legislators is currently deciding if and when low-income consumers are allowed to have credit.
These legislators are backed by lower-interest lenders who are able to keep their interest rates lower by fluffing their contracts with hidden add-on products like credit insurance.
This means that America’s low-income families, many of which are Hispanic, are not being given may lose the opportunity to work with lenders that are transparent with their rates and who care about the consumer and forced to work with unregulated or unethical lenders.
If these legislators have it their way, one of the most dependable sources of fast credit for hard-working families would disappear this year and be replaced by lenders offering appealing low-interest rates tied to bad contracts with hidden fees.
Saving options
When it comes to getting empowered to make the best financial decisions for you and your family it’s important to know your options. Saving for an emergency is ideal but it’s not always possible. When it comes to savings it’s important to be able to take into consideration many different options. One saving option that you can consider is an endowment plan. Endowment plans are part saving plan part insurance and they are a great option if you want to save for a specific financial goal like education, retirement or other specific goals or milestones.
It’s important to inform yourself to really understand proposed legislation and all of its repercussions and implications. This article explains how interest rate caps don’t really protect borrowers but make burrowing difficult instead. This, in turn, puts families in need in a more difficult situation when it comes to their options for covering emergency expenses. Like the author of this article I agree that legislature needs to protect consumers but it’s also important to consider that legislation that eliminates accessible and regulated short-term loan option puts the people who rely on them, many of them Latinos, in a very difficult situation.
The Balancing Act
When shopping for a short-term loan, it can be easy to be fooled by the offer of a lower interest rate. But think about how these lenders are able to offer rates that are so much lower than their competitors. In order to make a profit, they’re forced to include penalties and hidden fees within their contracts to extort more money out of their customers.
Alternatively, reputable lenders charging a higher interest rate may be overlooked by cash-strapped consumers. As you’re shopping for a loan, remember that everyone has the right to transparency – including the understanding of all costs, fees, interest rates and terms associated with their loan. Don’t be fooled into applying for a low-interest loan that comes with strings attached or unneeded add-on products, like insurance.
How to Find a Reputable Lender
Finding a reputable lender for your short-term loan means you’ll have to wade through the advertising and gimmicks to see what’s underneath. There are still financial institutions that support lenders’ rights to transparency and privacy. During the loan application process, ask pointed questions about the loan’s terms, interest rates, and associated fees. And before signing off on any personal loan, carefully read the contract associated with the loan to be sure there are no misunderstandings about what’s expected of you and the lender you’re working with.
Paula studied architecture and now makes a living as a freelance writer,traveler and amateur photographer.She started her writing & publishing career as the editor of Bebé y Mamá, the first parenting magazine in Guatemala.She is the founder of www.GrowingUpBilingual.com and www.365thingsswfl.com and writes articles in Spanish and English for both magazines and the web on travel,food and bicultural and bilingual parenting .
When she is not on a plane or road trip she likes to create recipes inspired in the flavors of her native Guatemala.
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This is excellent information. You really need to know as much as possible before you get any kind of loan.
This is some excellent and important information to consider. Not all short-term loans are the same, and several have such high interest rates. Thanks for sharing this info!
There have been many times when we needed a short term loan. There are so many important things to consider when selecting your lender.
It’s always an advantage if you know the rates and how to balance it. Make sure you use your loan wisely. Do not overspend!
sometimes you do what you gotta do. short term loans can be a lifesaver at times.
This is such good informatioN! Thank you for sharing, good things to remember!
This is a must read article for anyone shopping around for a short term loan. It is always best to “read the fine print” and ask questions to know if you are getting the right loan that would suit your budget.
There are some really good points here. Sometimes it is better just to wait and save, as loans can get you in a sticky mess for sure xx
Great points here and it’s so important to know what you’re getting into with any contract. Reading carefully is key.
I would always check the rates before agreeing to a loan. Some places charge crazy amounts so it’s not even worth it.
I really enjoyed reading this post. These are really great tips. Financial literacy is so important, especially when taking out loans.
Great tips! It’s so easy to get sucked into something that could cost you way too much for a small fix today.
Okay, such great info for people who are considering these types of loans!!!! Easy to understand, which is key cause this stuff can be quite confusing!
Taking out any sort of loan is something that we all need to think about so hard. These are some think through tips for sure! Thank you for sharing.
You have a lotta great points here. I do not typically need to get a small loan, but if I do I’m going to pay attention to this a lot better.
I try not to get loans but these are helpful tips if I ever do decide to get one.
This is all really good information! It can all be overwhelming when it comes to loans and knowing what is best to do. Thank you so much for sharing this and breaking down short term loans!
Thank you for bringing this message to the forefront. It’s an important discussion we should be having within our communities and with our representatives in Congress!
These are important things to keep in mind indeed. Making a smart financial decision is key!
This is very informative and educating yourself on loans and credit cards is vital and should be taught in schools. I know so many that have gotten caught up in the “fine print.. “
Short term loans are fabulous if you take the time to learn more about them, the details and how much you’ll receive. I have done a few short term loans in my life and some totally screwed me while others helped me in a hard time.
You’ve got a lot of great tips and such here. I actually was just talking to my husband yesterday about a short term loan. Glad I was able to read through this.
This is so important. Our banking system is designed to drive lower income people deeper and deeper into debt. You really do need to be careful when you are considering our loans.
Money can be so stressful! It’s important to not make any rash decisions that will end up being more harmful than helpful with loans. Finding a reputable lender is an important step to considering a loan.