No one plans to fall into bad debt. When taking out a loan or applying for credit, you will do so with the aim of paying the creditor back. But when finances get really tight and you begin to use credit to get through your day to day life, you could soon find yourself taking out more loans in order to pay off the debt that you owe and once you head down this path, it can be a downward spiral.
South Africa is a country that is drowning in debt. The amount of money that people owe to creditors is unbelievable. Reckless lending of money by creditors who did not do a proper background check on those who they were lending money to has resulted in the creditors not getting their money back, and people being blacklisted for the money that they owed. Changes introduced by the law have resulted in people’s salaries being protected from creditors who in the past have been allowed to remove money from a person’s account no matter how far in debt they have been.
Falling into bad debt is not just something that happens to the person who has been careless or who doesn’t have a well-paying job. Even well-known figures have fallen into debt and have been in need of a bad credit loan to bail them out of trouble. But bad debt has the danger of giving you a bad credit score and when this happens and you need credit then you might find that you need a bad credit loan.
The bad credit loan
The bad credit loan is for those who have a bad credit history, plain and simple. The credit history of the person is going to stay with them for a very long time and if you have been blacklisted that mark has the possibility of staying next to your name for the rest of your life.
When a person has fallen badly into arrears they are said to have become indebted. This means that they have not been paying their debt at the end of each month and they have now fallen far behind. Usually a person in such a position will approach a debt counsellor to help them out of their financial crisis. A debt counsellor will determine if the person is indebted if their assessment shows that the person they are helping will not be able to pay their debt back at the end of each month.
Bad credit loans are usually those loans that are available to those who have bad credit that is tarnishing their credit history. If you are struggling with a bad credit score then there is a good chance that credit providers are not lining up to give you credit. But those institutions who understand that bad credit shouldn’t automatically mean that you are a risk are the ones who can offer you a bad credit loan.
Anyone who has a bad credit history, has been blacklisted and is not under review can apply for a bad credit loan. The bad credit loan is a great option for those who are in desperate need of a financial solution but cannot find their feet. It could be an emergency situation that requires money or it can be surviving to the end of the month that will require you to get a bad credit loan.
Will my credit history be screened?
While there are some credit providers who will give you credit even if you have a bad credit score, it doesn’t mean that they will not have a look at your credit history before they decide to give you a loan. Naturally some people will be genuine risks, not everyone has been taken advantage of by the credit company.
So if you are asking if the credit provider is going to have a look at your credit history then the answer is that yes they will. A bad credit loan is not a guarantee when you apply for it. There are a number of other factors that the company will have to look at before they decide to give you a loan. Creditors who loan bad credit loans are going to want to protect you as much as they are going to want to protect themselves. If you already have a bad credit score then you will not want to be left further in the lurch by having another loan against your name that you cannot pay off. The idea is to help you to get out of debt rather than push you further into the corner.
With this in mind always make sure that you only loan amounts that you know you will be able to pay back. If you loan massive amounts and find that you cannot pay the amount back then you will be back at square one. So responsible lending is always the ideal way to go. This way you will never loan more than you can afford to pay back.
Here are a few tips you can use to pay off your debt before it becomes a crisis:
1. Create a budget and stick to it. Sometimes seeing how much you can afford to borrow and where you can afford to cut back on costs is enough to shake you into action and start saving money.
2. Try to pay off your most expensive debt first. The debt that has the highest interest rate is the one that you should pay off first because the longer you leave that debt the more interest you will have to pay on it. Perhaps use your bad credit loan to pay off this debt.
3. Speed up the repayments by paying off more than the monthly payments each month.
4. Stop spending on your credit card. It is so tempting to swipe that piece of plastic when you get to the till but the interest rates on a credit card can be huge. Leave your cards at home or if you are really tempted then consider freezing them so you cannot use them.
Bad credit loans are a great option for when you are in need of quick cash to cover that unexpected financial crisis. At Budget Cash and Cellular there are a range of bad credit loans for you to choose from.