When you’re struggling with debt, finding a light at the end of the tunnel can be tough. The stress caused by bills or collection calls can lead to sleepless nights, and the thought of obtaining any kind of financing can be overwhelming. According to an annual CIBC survey, 28% of Canadians planned on making paying down debt a priority for 2017. This makes sense, considering the latest data from Statistics Canada shows that household debt rose to a record 166.9% of after-tax income in 2016. Debt is, for many Canadians, a problem – but there are options. This week we aim to help when it comes to understanding bad credit loans.
There are loans available for people with bad credit, but buyer beware – lenders can take advantage of your situation because you don’t have as many options as those with good credit.
Here are a few things to keep in mind when it comes to bad credit loans:
Payday loans. Payday loans are easy to get for a reason: the only winner in this situation is the payday loan company. While you can obtain a payday loan regardless of your credit, fees are so high that they are almost impossible to pay off (which usually results in multiple payday loans), and these don’t report to the credit report so any positive behaviour is worthless when it comes to rebuilding. Don’t let those ads fool you – payday loans are dangerous.
Finance companies who front-load fees. Several companies offer loans to those with less than stellar credit, but do so by charging front-load fees. While, for some, this works, just make sure that the lender is willing to rebate fees if you pay off the loan early.
What to look for:
- Reasonable lending rates – just because your credit took a hit in the past, it doesn’t mean that you shouldn’t still be able to receive a rate that is reasonable.
- Reports to credit report – this is critical, as the only way to rebuild credit is with positive credit behaviour.
- Flexible payments – make sure that you can afford the payments.
- Forgiveness – the lender should have a provision to allow you to hold payments for a short period if you fall short.
Good people run into credit problems because of job loss, divorce, etc. At Prudent, we recognize this – that’s why we believe everyone deserves a second chance without being penalized for it.
Want more info regarding understanding bad credit loans? Call us today at 1-888-852-7647.