Have Bad Credit and Need a Personal Loan? Let’s Play the Bad Credit Lender Dating Game!

DatingGameV1

If you’re shopping around for a bad credit loan, it can be hard to know which loan is right for you. Really, it’s a lot like online dating. For one thing, just like there are a lot of sketchy people lurking online, there are also a lot of shady lenders out there looking to get matched up with inexperienced borrowers. But even among the honest and responsible lenders, how can you know which is really right for you?

Before we get to our most eligible options, here are some bad credit personal lenders that practice predatory behavior. You really can’t swipe left fast enough when you’re dealing with:

Payday Lenders

These lenders offer short-term, fast cash loans that only average around 14 days. That quick turnaround might sound nice but, in reality, these loans are pretty nasty. They have extremely high interest rates, with an average Annual Percentage Rate (APR) of 339 percent.[1] Payday loans are also structured to be paid back in a single lump sum, which is difficult for many borrowers. A lot of payday borrowers end up rolling their loans over again, trapping themselves into a continuous cycle of debt. It’s a bad relationship they just can’t get out of!

Title Lenders

Take everything we just said about payday lenders and add losing your car: That’s title loans. These are month-to-month, short-term loans with an average interest rate of 25 percent that adds up to an APR of 300 percent. Since these loans are secured by the borrower’s car title, you can usually borrow more with a title loan than you can with a payday loan. However, it also means that the lender can repossess your vehicle if you can’t pay the loan back. In fact, one out of every five title loan customers eventually has their car repossessed.[2] Imagine if you had to give someone your car in order to break up with them. That’s a person you should avoid!

Okay, now that we’ve got the bad eggs out of the way, here’s a few types of bad credit personal lenders that you can swipe right on and see where things take you:

Personal Installment Lenders

These lenders offer long-term installment loans, which usually have a minimum term of six months and are designed to be repaid in a series of equal, regularly scheduled payments. Their loans are also amortizing, which means that every payment you make goes towards both the principal loan amount and the interest. Dating them would be a calm, loving series of Netflix binges, home-cooked meals, and weekend antiquing. OppLoans is a personal installment lender, and our interest rates are 70 to 125 percent lower than your typical payday lender. That last part isn’t true of all installment lenders by the way. If you’re taking out an installment loan, you’ll still want to do your research. To learn more about OppLoans, or to apply for a personal installment loan today, just visit our homepage: www.OppLoans.com.

Credit Unions

These lenders work a lot like traditional banks, only they are not-for-profit, member-owned organizations. Credit unions also have different requirements for membership than banks do. Being eligible for membership could depend on where you work or live, or even where you go to church. Credit unions that belong to the National Credit Union Administration (NCUA) offer Payday Alternative Loans. These loans have principals between $200 and $1000, terms that are one to six months long,[3] and interest rates that are capped at 28 percent.[4] That could be a great deal! However, you have to be a member for one month before you qualify for one of these loans. They’re a great date, but they’re picky.

Charities and Community Organizations

If you have bad credit and need a small cash loan, you might be able to get one from a local charity in your area. Many of these organizations have small-dollar lending programs with reasonable rates that are aimed at combating predatory payday lending in small communities. Some even offer credit-counseling services, which can help you build a budget, practice better financial habits, and improve your credit score over time. They help you grow and make more responsible decisions—like any good partner should.

We all know people sometimes need a financial partner. So skip the predators and go with a reliable, honest, financial institution that has your best interest at heart!

References:

  1. “Payday Loans and Deposit Advance Products.” Retrieved September 6 from http://files.consumerfinance.gov/f/201304_cfpb_payday-dap-whitepaper.pdf.
  2. Pascual, K. “1 In 5 Auto Title Loans End In Car Repossession: CFPB Study.” Retrieved September 6, 2016, from http://www.techtimes.com/articles/159308/20160518/1-in-5-auto-title-loans-end-in-car-repossession-cfpb-study.htm
  3. Payday Loan Alternatives. MyCreditUnion.Gov. Retrieved September 1, 2016, from http://www.mycreditunion.gov/what-credit-unions-can-do/Pages/payday-loan-alternatives.aspx
  4. Aho, K. “Payday Loans: How They Work, What They Cost.” Retrieved September 1, 2016, from https://www.nerdwallet.com/blog/loans/payday-loan-alternatives-dodge-debt-trap/

Misuse (1)

Imagine going on your dream trip around the world. Would it include sunbathing in Hawaii? Sampling gourmet wine in Paris? Eating at an Outback Steakhouse in Australia? Sounds amazing, right? With a personal loan, you could make that dream come true. But should you? Memories of your world tour might be priceless, but personal loans most definitely aren’t.

Dearest reader, welcome to a very special presentation on how not (we repeat: not) to use a personal loan. Sure, it’s tempting to borrow money now and worry about paying it back later, but keep in mind, there’s always a later.

Your dream vacation

Most Americans will fall into one of two camps—those who travel annually and those who can recite their entire Netflix queue on command. Folks in the traveling camp spend an annual average of $4,700 on vacation expenses.[1] And while that average includes international jet setters (and not just families who drove five hours to visit Grandma), we still cannot recommend taking out a personal loan to cover travel expenses.

If you think about your dream vacation and calculate a budget that includes transportation, lodging, food, and entertainment, the total cost should be less than four percent of your annual income—and that’s only if you aren’t in debt.[2] Travel smart (you can also indulge in a staycation)! You don’t need a personal loan to see the sights. Deposit a set percentage of your income into a savings account every month. As long as you don’t touch that money, you’ll have next year’s travel budget ready to go. Bon voyage!

Your home theater

Ah, movie night at home. Unwinding, cuddling with popcorn and bae, and … panoramic digital surround sound, a 1080p projector, and chairs that auto adjust to your body weight and temperature? [YOU SHALL NOT PASS!] We know that having a movie theater in your home or apartment would be a dream come true, but this could be the worst excuse to take out a personal loan ever. Average costs of a media room or home theater really run the gamut in 2016. If you’re an audiophile, you’ll pay top dollar for sound; if you’re a gamer, you’ll want the latest consoles; movie lovers seek awesome picture resolution—you get the idea. You could pay as little as $800 for a decent projector or you could drop $40K for a company to convert an entire room into a private cinema.[3] The choice is yours, but we strongly recommend saving (and then saving some more) if this is your dream.

Skip the personal loan for a home theater installation and go out to the movies instead. Sure, the floors will probably be sticky and someone will chew their popcorn too loudly, but isn’t that just charming tradition at this point?

Your new pool(?!)

Home repairs are one thing, but a new home luxury like a pool, jacuzzi, or waterslide isn’t worth going into debt for (well, maybe that waterslide).

Depending on the type and size of pool you’re considering installing or building (above ground, in-ground, fiberglass, waterfall installation, etc.), private home swimming pools can cost anywhere from $6K to $22K in initial build costs alone. Factor in the cost of monthly maintenance and, well, you’re looking at one of the most expensive ways to chill during the summer months. We would never advise anyone to take out a personal loan to install a luxury home item. It’s just not a great investment. And we mean that literally: a backyard pool doesn’t exactly convert to increased property value either.[4] Looking for a more affordable option? You really can’t go wrong with laying under a lawn sprinkler, which will run you about $12.98 for a decent model.

Your fairytale wedding

Depending on what state you and your betrothed live in, weddings these days cost an average of $30K.[5] That’s outrageously expensive for a single day—even if it’s a day of blissful fun and love. This is why we recommend not using a personal loan to pay for a wedding. Instead, simply use saving strategies and a strict budget in the months (and/or years) leading up to your big day.

Even using a small personal loan to hire that photographer or DJ you want at the reception is not a wise investment, as you’ll be adding new debt to a brand new marriage.

Lucky for you, DIY is totally in right now; and it can save you hundreds on everything from floral arrangements to table centerpieces. You’ll encounter plenty of challenges as a newlywed couple without having to spend your first five years of marriage paying off one fairytale day.

OppLoans

But what if you actually need a personal loan? Forget the fancy vacation or the new swimming pool; what if you just need money to pay an unexpected car repair or hospital bill? We’re not talking about a bride freaking out over a change of venue, we’re talking about a genuine cash flow emergency.

Well, that’s when you can turn to OppLoans. Our personal installment loans can be a real life saver when it comes to covering unforeseen expenses! Apply today and you can have funds in your account as soon as the next business day. Our loans aren’t a shortcut to your dream trip around the world, but they can help keep your life working.


References

  1. Webber, Rebecca. “Average Cost of a Vacation.” Value Penguin. Accessed July 28, 2016. https://www.valuepenguin.com/average-cost-vacation
  2. Luciw, Roma. “How much is too much to spend on a yearly vacation?” The Globe and Mail. Accessed July 28, 2016. https://www.theglobeandmail.com/globe-investor/personal-finance/how-much-is-too-much-to-spend-on-a-yearly-vacation/article1360225/
  3. “How Much Does a Home Theater Cost?” Elegant Home Theatre Systems. Accessed July 28, 2016. Elegant Home Theater Systems. https://eleganthometheatersystems.com/how-much-does-a-home-theater-cost”
  4. “Build Swimming Pool Cost”. Fixr. Accessed July 29, 2016. https://www.fixr.com/costs/build-swimming-pool
  5. Taylor, Susan Johnston. “The Real Cost of Owning a Swimming Pool&rdquo.” U.S. News: Money. Accessed July 29, 2016. https://money.usnews.com/money/personal-finance/articles/2015/05/19/the-real-cost-of-owning-a-swimming-pool”
  6. Quinn, Brian. “Average Cost of a Wedding (2016)” Value Penguin. Accessed July 28, 2016. https://www.valuepenguin.com/average-cost-of-wedding”

5 Personal Loan Dangers (And How To Avoid Them!)

DANGERS (5)

A personal loan is like a trail map: Use it correctly and you can reach your financial destination. Use it incorrectly, and you can fall further into debt.

The summer is a fantastic time of year to go for a hike. After all, who doesn’t love the smell of fresh pine needles, mountain flowers and… is that a skunk? Any experienced hiker will tell you that going for a long hike without knowing what to expect can be pretty dangerous.

Just like hiking, taking out a personal loan requires knowing the hazards. Learn how to avoid these five personal loan dangers before selecting a lender.

1. Taking out a loan for the wrong reason

If you’re considering a personal loan, be sure to explore all of your options before borrowing. Maybe you have a friend or family member that could lend you money. Perhaps your employer wouldn’t mind advancing you some cash. Could you pick up some extra hours or a part-time job to get the money you need?

If you only need a small amount of money, a personal loan probably isn’t your best option. However, if you’re dealing with a high-cost emergency, like a car repair or medical bill, then you may very well need it.

Before you borrow, ask yourself if the money you’re requesting is for a need or a want. Paying for a sweet new mountain bike? That’s a want. You don’t actually need it. But paying the ER bill for the broken leg you suffered while riding your sweet new mountain bike? That’s most definitely a need.

2. Taking the first loan you’re offered

It’s 2016! The American consumer has more power now than ever before. In the past, we may have believed what we were told on television, in the newspaper, and on the radio. But now, thanks to the internet, it’s the people who have the power.

Check out the The OppLoans Guide to Safe Personal Loans for tips on what to look for in both a loan and a lender. And remember: if you don’t like what one lender is offering, then you should look for a better offer! And don’t just check out a company’s loans, look at their ratings and customer reviews, too. Do their customers like working with them? Are they reasonable, friendly, responsible? Are they accredited by the Better Business Bureau? Read their customer reviews on sites like Google and Lending Tree.

If you were buying camping gear for a multi-day hike, you wouldn’t just buy the first tent you saw. The same goes for a personal loan. Taking some time to shop around for the best possible loan could end up saving you a lot of time, money, and hassle.

3. Skipping the fine print

Some lenders may try to pressure you into signing in a hurry. They may want you to miss certain details like additional fees and charges. Make sure that you read the entire contract before you sign it. Plus, the very fact that a lender tried to pressure you is a huge red flag. It’s the rattle that lets you know there’s a snake.

If you don’t understand something about your loan, ask.

The main aspects you’ll want to know before agreeing to the loan are 1)The APR, 2) The length of the term, 3) The amount of your payments, and 4) Whether the interest rate is fixed or variable. A fixed rate means the interest stays the same throughout the life of the loan, while a variable interest rate can go up and down.

4. Accepting More Than You Need

Another tactic that some lenders will employ is offering you more money than what you need. This can lead to higher monthly payments and more money spent in interest and fees. Find out exactly how much you need, and don’t be talked into borrowing more (read more in How to Stay Safe With a Bad Credit Loan).

You’ll also want to know how much you can afford in monthly payments. It’s like a hiker knowing how much weight they can carry in their backpack: If your monthly payments are more than you can handle, you won’t make it to the end of the trail. The best way to find out how much you can afford is to construct a monthly budget before agreeing to a new loan. If you need help figuring out your budget, check out this awesome budget calculator!

5. Payday, Title, Pawn Shop

These three types of loans are widely accepted as some of the riskiest and most expensive options out there. They are often labelled as “predatory loans.” And if there’s one thing you want to do when hiking, it’s avoid predators.

All three of these loans tend to come with extremely high interest rates and very unreasonable terms. With a payday loan, you can almost guarantee you’ll be paying an obscene amount in interest and additional fees. And title loans? They require you to use your vehicle as collateral to obtain a high-cost, short-term loan. Many customers end up paying thousands of dollars in interest fees just to avoid losing their car or truck. Lastly, pawn shop loans are usually very small but come with high interest, short terms, and additional fees.[1]

It’s a good idea to avoid these types of lenders. They won’t ever leave you whistling “Happy Trails.” Besides, there are plenty of other safe and affordable options out there. OppLoans for instance, offers borrowers safer personal installment loans with longer terms, and interest rates that are up to 125% less than payday loans. If you’re in need of some quick cash, apply today!


References:

[1] Lee, Jenna “The Ugly Truth About Payday, Pawn Shop and Car Title Loans” U.S. News. May 25, 2014. Accessed July 20, 2016. AOL.com