A large number of people are relying on bad credit loans to fund their small needs. Getting funds despite a bad credit rating is not a tough job since online lending. You get money as quickly as you put in your loan application.
There are various direct lenders offering such loans at different interest rates, which is why you need to research beforehand to apply to a lender that offers money at relatively lower interest rates.
If you do not want to get caught up with a debt trap, the first thing you need to ask yourself is where to get a loan in Ireland with bad credit. Since you cannot invest your time in researching a lender as emergency crops up, it is better if you have a few options in advance. Compare interest rates and then make your decision.
There is no doubt that you will end up paying higher interest than those who have a good credit standing, but you commit a few mistakes that increases your chances of falling into a debt spiral and dropping down your credit score.
Not telling the truth about your financial situation
White lies do not hurt anyone, but they can hurt borrowers. This is pervasive. A lender will decide the disbursal limit based on your income, but most of you overstate your income by saying that you cannot show proof of all of your income and sometimes do not disclose all current debts. This is where you ask for a trouble.
Lenders make decisions based on your application. If you provide wrong information, you will face difficulty paying off your debt on time. Affordability is one of the biggest factors that you cannot ignore.
Since you have to pay interest along with the principal, it is paramount that you take into account real-time cash inflows. Anticipation will never work in your favour.
Not thinking about the long term impact
A loan can undoubtedly be a big part of your budget, especially if you are living from paycheque to paycheque. Therefore, you should get acquainted with how loan works.
Bad credit loans aim at helping you tide over during financial emergencies. You may need to borrow money due to either to have your car repaired or to pay your medical bills. Whatever the reason, you need to understand how a loan will leave an impact on your living expenses.
Desperation often pushes you to borrow money, and hence you forget to consider your affordability. Though the loan seems to be small, you should think the long-term consequences of borrowing because most of the time you end up with solving a problem and creating a new one.
Not controlling your emotions
If one of your best friends asks you to become a guarantor, you may be immediately ready for the sake of your friendship, but this might be your big mistake, and you double the error if you take out a loan for someone else.
You may be surprised to know that why you will take out a loan for someone else, but direct lenders have come across several cases. For instance, parents are taking out a loan for their children because they are highly likely to get an attractive deal, or you need money to bail out your friends.
If your act as a guarantor, you will lose your credit score as well as ending up paying money on behalf of the borrower in case of a default. This will reduce your chances of borrowing money down the road at affordable interest rates.
It is good to be helpful, but you do not need to be fool. Try to avoid taking out a loan for somebody else, and if somebody asks you to act as a guarantor, make sure that the borrower will not default.
The bottom line
You all know that you can use bad credit loans to fund financial emergencies and improve your credit rating, but you should be a bit careful with your borrowing. You often blame high interest rates when you face difficulty paying off the debt, but the fact is you do not consider the three NOTs mentioned above. Next time if you take out these loans, make sure that you bear these points in your mind.