Advantages and Disadvantages of Using Online Credit

using online credit

Without the provision of collateral, an adverse credit history makes it far more difficult to borrow money from a lender. However, it may be possible to get credit online for up to £1,000, regardless of past credit indiscretions – missed payments, defaults, active debt solutions and even bankruptcy. When a member of the family is unable or unwilling to help out, a cash advance could provide the perfect solution.

Advantages of Instant Payday Loans

  • Guaranteed Cash Loan. An application will be approved, provided that the applicant is a UK citizen, over 18, in full-time work, has 2 forms of identification and a personal checking account.
  • No credit scoring. Few banks will approve loans for people with bad credit due to the use of credit scoring, but short term lenders are much more lenient.
  • Flexibility. They can be attained from a local shop or online.
  • Quick approval. If the basic eligibility criteria for a payday cash loan are met, it will be sent via bank transfer within just 24 hours.
  • Emergency situations. Finance is available for any purpose. Although there is a downside, an advance could help to pay the rent or fix a car in order to get to work.
  • Minimal paperwork. Compared to other ways of borrowing money, there is less administration involved with using a company like Cobra Payday Loans.

Disadvantages of This Type of Finance

  • Rate of interest. The high default rate among customers means that the rate of interest must reflect the risk. It costs up to £25 to borrow £100 for a month. However, many states have placed an upper-limit on the maximum APR that customers can be charged. Other have banned them entirely.
  • Short term cash loan. Credit for people with bad credit are only available for up to one calendar month. This means that it isn’t suitable for debt consolidation purposes.
  • Cycle of dependency. Most customers are a source of repeat business. This is because repaying the principal and any interest that has accrued leaves less money to pay bills the month after.
  • No job. Cash advance payday loans aren’t available without a full-time job. There are loans for unemployed people available from specialist lenders.
  • Debt problems. Easy credit regularly leads to the purchase of goods and services that aren’t genuinely needed. Spending tomorrow’s money today is rarely a prudent strategy.
  • Collection agencies. Unless personal debt is repaid punctually, interest and charges will continue to accrue. In order to recover the balance, debt collection agencies are likely to be used.

Are Cash Loans Worthwhile?

Online finance can help someone out of a short-term financial hole, such as paying the rent or mortgage. Provided that the customer has a means of repaying the debt, such as a bonus or over-time payment, it can provide a genuine financial lifeline for that person. The problem with a loan for people with bad credit is that it attracts a high rate of interest. Failing to repay the debt punctually will lead to further interest and charges so it is inadvisable to borrow money unless there is a way of repaying it. If struggling with debt, seek advise from a non-profit debt counselling service.

Share: