With the Holiday season, spending is at all-time high. And although the bad credit loans were originally marketed to be used only for emergency purposes, a lot of consumers these days also use the money for their holiday shopping spree. According to charities providing debt advice, the number of people who came to them for help on their bad credit loans has reached close to 30,000. This is a huge leap from the insignificant number that does not need to be recorded over three years ago.
Why Consumers are Stressed Out by Bad Credit Loans
Based on the reports released by several charitable institutions for debt counseling, there are three main reasons why people would run to them for help. The first reason is taking several bad credit loans at once. It must be remembered that these are short term loans that need to be paid back on the borrower’s next payday. Because of this type of loan requires no credit check, these loans impose high risks to the lender; thereby the higher interest rate. If you took out several bad credit loans at once and you only have one paycheck, how will you be able to pay all your debts and still have enough for your monthly living expenses?
The second reason why the red flag is raised on bad credit loans is that the full-blow of the high interest rate is only realized once you start missing the payments. This is because if you default, you will be charged with penalties and other fees on top of the interest rate. And for this reason, you get trapped in debt longer than what you have originally expected.
To counter this, it is best to come to a full understanding of what bad credit loans are before you decide on availing of these services. There are plenty of resources online to provide you with the information you need. On top of that, you have free access to your lender’s FAQ page so there is no reason for you to be misinformed when it comes to the cost of the bad credit loans.
Lastly, you would seek help for their bad credit loans when you have lost your job and you still have two or more loans to pay off. If this happens, you have to talk to your lender so that you will be provided with options. A lot of lenders these days have a program in place for people like you who have suddenly lost their jobs in the middle of a contract. Your payments for your bad credit loans could either be frozen or you might be given an extension without the requirement of rollovers.
What Associations of Bad Credit Loans are Willing to Do
Associations of bad credit loans have agreed to enforce stricter measures among their members. Such measures would include better transparency of the guidelines of such loans and other lending services they offer, and perhaps the capping of interest rates.
More importantly, associations have taken steps to better educate existing and future customers by offering free video seminars and conducting forums where both parties can interact with each other.
How to Cut Costs this Holiday Season
This holiday season, you don’t have to take as many bad credit loans as you can. You can make your family happy by giving simple gifts (handmade would be best) and by preparing a simple meal. Nothing grand would ever replace the true Christmas spirit of being with your family.
Bad credit loans are not bad. They can actually prove to be heaven-sent if you use them correctly. This holiday season is no exception and you should still practice frugality and care when dealing with bad credit loans.