The credit crunch, followed by the longest recession since records began, has meant that many consumers find themselves in a position where they are finding it difficult to make ends meet. In fact, many households are facing the most difficult financial circumstances in living memory and relying on credit, often in the form of one or more credit cards. Nevertheless, despite the Bank Rate being held at a record low of 0.5% for over a year, the cost of credit card borrowing continues to spiral; the average rate of interest is now 18.8%, its highest level for 12 years and some providers charge as much as 46%.
Cash Bad Credit Loans
Of course, for anyone with an unblemished credit history, a personal loan can be a cost-effective alternative to credit card borrowing, although even here the average APR ("Annual Percentage Rate") for a £5,000 loan has risen from 9.8% to 13.9% in the past two years according to recent figures. Those borrowers with a less than perfect credit rating, as a result of their previous spending and repayment habits, may have to put up with higher interest rates, at least until their credit rating recovers sufficiently, but cash bad credit loans are available.
Indeed, some specialist providers offer "instant" cash bad credit loans, otherwise known as payday loans, to borrowers such as tenants and the self-employed, who are otherwise unlikely to be accepted for a loan. Cash bad credit loans are typically available for amounts up to £750, but to be economically viable for the borrower these really must be repaid within a month, or two at the outside. The reason for this is that the APR of payday loans is actually very, very high; it is typically at least 1,000%, but 1,500% or 2,000% is not uncommon.
If the loan is repaid within a relatively short space of time, as intended, the actual cost of borrowing is usually in the region of £25 per £100 borrowed, or 25%. Lenders are required by law to quote the APR and whilst this is useful for comparing traditional loans, which are repaid over a matter of years rather than days, it is not a particularly useful measure for payday loans. It is unwise to "roll over" cash bad credit loans from one month to the next, because after doing it once it may be tempting to do it again and so create a debt that spirals out of control.
Carefully thought through, however, cash bad credit loans can be the answer to short-term financial difficulties. Of course, you need to be aged at least 18 and have a regular income to apply for a cash bad credit loan, but after filling in a short online application form, you could receive cash within 15 minutes in some cases. In some cases, you will receive an instant decision on your application, but depending on your own bank's systems it may take 24 or 48 hours for funds to arrive in your bank account.
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