Bad credit facilities are availed by those who have a bad credit history. People accrue a bad credit history when they fail to repay a loan or make sustained defaults while repaying a loan. Whatever be the reason, if a borrower fails to repay a debt, it will reflect as a bad mark in his or her credit history. The problem with a bad credit history is that one will not be able to avail other financial products at a decent interest rate.
Payday loans may be availed by those who need emergency cash. Since payday loans do not require borrowers to provide any collateral as security, people can avail a loan immediately. As the name suggests, such loans are provided to help borrowers manage their expense until the next pay date. This loan is best suited for those people who are running a tight budget, or for those who may need some extra cash to tide over a sudden emergency.
Since the credit history of a borrower is not usually assessed for a payday loan, all kinds of customers with a bad credit history may avail a payday loan. Borrowers can avail a loan between GBP100 and GBP1200. The loans are available for a tenure of 14-31 days and the borrower is expected to return the money within the time frame. If the borrower needs to extend the loan, he or she will need to apply for an extension and pay interest for the days that they availed the loan. The disadvantage with such a loan is that lenders will charge a high interest rate because the loan is provided without the backing of collateral.
Payday loans are a good means to fend off emergency requirement of cash. Therefore it should not be availed for less important needs. While it is a very convenient way to avail money for very short term needs, customers who avail a payday loan without having an idea of how to repay it will be running a huge financial risk.
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