Emergency Loan Rates

All About Emergency Loan Rates

If you are faced with an unexpected expense before your next paycheck, you don't need to panic because you can now borrow using emergency loans, which are designed for these needs only. You can utilize these loans even if you have a bad credit rating. An emergency loan must be taken only after you have done extensive study of the specific lender’s loan rates.  

Payday loans are also known as bad credit emergency loans because your former credit report is not checked. So having a bad credit history is not going to ruin your chances of securing an emergency loan. Because the companies offering payday loans do not check your credit history, they assess your application by verifying the source and amount of your income as well as other banking details. The only two criteria that you need to fulfill in order to secure the loan are to have a checking account and to have a steady source of income. In bad credit emergency loans, the loan amount usually varies from $100 to $1,500, and the repayment is made in 14–31 days.

It has been observed that people who borrow using emergency loans are more liable to default on their repayment than those who borrow from banks.

How Do Emergency Loans Work?

Emergency loans work out in the long run for the lender because they charge higher interest rates than regular bank loans. So the high rates of interest offset any loss caused due to no repayment of the loan. Moreover, cash-strapped people in dire need of money don't really have much choice. They can't afford to be very choosy about interest rates when they need money for urgent needs. This is how emergency loans are viable for the lender.

Important Points About Emergency Loan Rates:

Normally, the rate of interest is charged competitively for emergency loans. This is because today many companies are offering such emergency loans.

Because the rate of interest charged for emergency loans is significantly higher than what is charged for bank loans, it becomes difficult to repay them. Loans of a very high amount become almost impossible to pay back. Thus, it is advisable not to take these loans unless there is real urgency and to keep the amount of the loans moderate.

Even though your credit history is not checked while taking the emergency loan, you can negotiate the rate of interest with your lender if you have a good credit report. Hence, you can get an emergency loan at cheaper rates also.

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