Bad Credit Loan Coming Attractions!

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Everyone is talking about bad credit loans these days, and Hollywood seems to be taking notice. (Editor’s note: They’re not.) All the newest films are about bad credit lenders! (Editor’s note: They’re really not.)

With so many people wondering what their personal loan options are, we thought you might enjoy hearing about the hottest upcoming films that deal with bad credit loans, which we may or may not have made up entirely (Editor’s note: We did).

If you have a not-so-hot credit score and you’re worried about getting a loan, these upcoming blockbusters might help you figure out which bad credit loan works best for you.


THE INTEREST RATE DECEIT

Tammy is just an everyday woman who needs a loan for some car repairs. Unfortunately, her credit is quite low. She sees some advertisements for bad credit loans, and figures the safest choice would be to pick the one with the lowest interest rate.

But, spoiler alert, there’s a big twist! The loan she chose had so many fees, it ended up being more expensive than the loans that had higher interest rates. If only Tammy had made sure to compare the loans using their APR, or annual percentage rating—she might have met a better fate. The APR tells you the full cost of a loan, including interest and fees, so it’s the best way to avoid an unpleasant twist in your story.

David Reiss, a law professor and editor of REFinBLOG.com (@REFinBlog), gave us an example of why APR is so important: “It would help a potential borrower compare the cost of credit between one loan with a 5 percent interest rate and one with a 4 percent interest rate that charges a point at origination.”

In other words, a loan that charges a fee when you take it out could actually be just as expensive or more expensive than a loan with higher interest rates and no fees.

FLAMING RUBBER

Jack Steele is a member of the CIA’s ARD (Awesome Racing Division). He stops illegal smuggling rings with muscle cars and incredible driving skills. When a former member of his team goes rogue, he has to chase him from city to city, pulling off incredible driving stunts as he carries out justice on the road.

Or he would have, except he lost his super cool muscle car to a title loan. Jack Steele has a bad credit rating due to some irresponsible purchases he made when he first got the secret agent job. This means that he has a limited choice in lenders.

He knew he would have to give up the title to his car as collateral, but he figured he’d be able to make the payments. Unfortunately, he was only given one month to pay the entire loan—with fees and interest. That was more than he could handle.

His car was repossessed, and now he has to carry out his mission by taking the bus from city to city. It does not work out well.

NIGHT OF THE PAYDAY LENDER

A group of teenagers wants to rent a lake house for the weekend, but they’re not sure they can afford it. They decide to take out loans from a payday lender to pay for their two-week trip. It seems like the perfect vacation at first, but then they notice something scary spreading through the house. It’s the realization that there’s no way they’re going to be able to pay back this loan in time!

One of the teens double-checked the terms of the loan, and they realized they’re going to have to pay it back in full—with interest and fees—before they even head back home. They decide their only hope is to pay a rollover fee and extend the loan. But this turns out to be a terrifying mistake and they’re trapped forever… in a cycle of debt.

AMORTIZE THIS

Lisa has bad credit. John works at a lending agency that offers bad credit loans. Lisa needs a loan, but is worried that John might work for one of those payday lender scams. Their relationship blossoms as he explains that they actually offer installment loans based off her ability to repay, with long, amortized payment terms.

“Amortized” means that each payment Lisa makes will be paying off a portion of the interest and the principal, the original loan amount. That means Lisa will actually be able to pay off her loan in full over a set amount of time, and she and John can live happily ever after.

EXTRA CREDIT

Steve thought he’d be stuck with bad credit forever, but then he went to study ancient credit techniques in the Himalayan Mountains. That proved to be too cold for his liking, so he came back down to ocean level to find some more practical solutions.

For example, he could listen to nationally recognized credit expert Jeanne Kelly (@creditscoop). She gave us some advice for getting your credit score up, saying that you should pay on time—and that, even if you might have been sloppy with making your payments in the past, to start today to focus on all minimum payments to be paid on time.”

She also recommended that people pull their credit report and check for errors. If there is a mistake, you should contact the credit agency. After all, why should you have to suffer for their error?

Steve might also consider a credit building installment loan. This can be one of the better bad credit loan options, since a good lender will give you enough time to make payments you can afford, and even report those payments to a credit agency so you can grow your credit score. By the end of his journey Steve might even have… Extra Credit!

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About the Contributors:

Jeanne Kelly, is an author, speaker, and coach who educates people achieve a higher credit score and understand credit reporting. #HealthyCredit is her motto. As the founder of The Kelly Group in 2000 and the author of The 90-Day Credit Challenge, Jeanne Kelly is a nationally recognized authority on credit consulting and credit score improvement.

David Reiss, is a professor at Brooklyn Law School and director of academic programs at the Center for Urban Business Entrepreneurship. He is the editor of REFinBlog.com, which tracks developments in the changing world of residential real estate finance.