No Credit Check Payday Loans: 5 of the Greatest Pitfalls
You will never know when you stumble upon an emergency and you need some quick money. Still, since you have bad credit, your only option is to apply for no credit check payday loans. That payday loan can solve most of your problems, but many Aussies do not think about the drawbacks of this loan. This is why we decided to present five drawbacks that will make you reconsider using no credit check payday loans. If you do apply for them, you must use them carefully. Without further ado, let’s dig in!
What Are No Credit Check Payday Loans?
No credit check payday loans are small, short-term loans that you can repay using direct debit or your paycheck. The “no credit check” part comes from the fact that these particular services do not require a credit check to get your loan approved. That means that even if you have bad credit, you are still eligible for these types of loans. They are also small, easy to apply for, do not require a lot of documents and the whole process is short. In other words, you will be saving a lot of time in the long run. So, how can an Aussie use no credit check payday loans? You can use the money to pay your medical bills, utilities, to fund a small vacation, to shop or to pay your debts. It really depends on your financial situation plus how much you borrow using this loan.
What Are the Five Greatest Pitfalls of No Credit Check Payday Loans?
Like with any other financial service, there are some drawbacks that you need to know about. Even if you are financially ready, it is better to be informed about these pitfalls and avoid them because after you are done with this loan, you might realise that you are back to square one: in other words, in need of a loan.
1. High Interest Rates
Short-term loans with high-interest rates are not something new. However, there are a lot of things going around here. To put it plainly, no credit check payday loans come with high interest rates. Even if the loan has a short term, the rates will take their toll on your finances. Payday loans usually come with high interest and that is fine. However, no credit check loans are made specifically for those who have bad credit, defaults or bankruptcies. Thus, they come with even higher interest because the borrower is a high risk for the lender. Another reason as to why this happens is that these loans are unsecured. Therefore, if the borrower defaults, the lender doesn’t have any asset to auction. That is why the lender has a lot of reasons to charge high interest rates. So, if the client defaults on this loan, at least the lender will get a part of his/her money back.
2. Unaffordable Penalties
If you do not pay on time, you are going to have a bad time. When it comes to no credit check payday loans, the lender will withdraw from your account the monthly repayment. If he doesn’t get that repayment, he will apply a penalty fee that, after a while, can drain you out of your money. Be very careful about this.
3. Defaulting On No Credit Check Payday Loans
It is best to avoid defaulting on your credit file, but if it happens, you are going to get in a lot of trouble. You will have to deal with debt collectors that will harass you almost on a daily basis, and they can ruin your life. Another thing that will happen is that your funds will be withdrawn from all your bank accounts. If you happen to buy a car with no credit check payday loans, that car will be repossessed. Other governmental funds that go in your way will be withheld, and you will be in a tight financial spot.
4. Bank Account Problems
If your bank account has a negative balance and maintains that negative balance for a long period, you will risk losing that account. You will be forced to use your credit card for every purchase, which can bring high fees.
5. Shady Lenders
There is nothing new about shady lenders that prey on desperate people with bad credit. However, some lenders may do more just to provide you with an attractive loan that you cannot repay in time or at all. Some lenders can approve a no credit check payday loan that you cannot repay and can offer another one to “help” you. By “help,” we mean that the next loan will have higher charges and will be used to pay the first loan back. So, you will get into even more debt.
To have a better understanding of no credit check payday loans, we recommend checking Bad Credit Loans. There, you will find plenty of useful pieces of advice, and you will be prepared.