Are payday loans your only option when you have bad credit?
When times are tough, payday loans may seem like your only option in Texas. But are they?
Keep scrolling to learn more about these online short term loans and how online installment loans in texas may offer an alternative.
Why do people turn to payday cash advances?
An unexpected expense can be tough on any wallet, but it’s especially tough when you have no savings and a bad credit score.
Unfortunately, emergencies rarely take this into account. They rush into your life no matter how prepared you are to handle one. Life goes like this – you lose a few shifts, there’s an unexpected repair on your air conditioner, or you get stitches in the ER.
Borrowing money might be the only way to manage these expenses and get back on your feet.
The only problem is that your bad credit can make it harder to find a loan. A low score tells financial institutions that you have encountered obstacles in the past that cast doubt on your ability to repay what you owe today.
Some financial institutions won’t lend you money if you fall below their benchmark. But direct payday lenders do not have these limitations. They might be willing to play ball even if you have a low credit.
The reality of bad credit and the cost of the loan
Rightly or wrongly, your past borrowing behavior reflects your future habits, and a low score signals you as a potential risk to lenders.
Some lenders consider this risk too great to write you a check. But direct payday lenders hedge their bets in another way. They tend to raise their prices, so you end up paying more to borrow than if you had good credit.
How much you pay depends a lot on your location. Each state regulates the rates direct payday lenders can charge on their cash advances, and some (like Texas) have looser restrictions.
According to responsible credit center, Texas has the highest average rates in the country. The typical $300 payday loan in the Lone Star State is 664%.
Short terms and high APRs can present a challenge
Online payday loans might still be the best bet, even at this price. However, direct payday lenders also expect you to pay everything back by your next payday. This gives you about two weeks to find your entire cash advance.
These short durations can be difficult to stick to if you are already struggling to make ends meet. Living paycheck to paycheck means you have very little left over after paying for the essentials, so you may not have enough room in your budget.
So, are there any alternatives?
Good news: there are other options online that give you more time to pay off what you owe. You may qualify for a bad credit installment loan, regardless of your score.
In a state like Texas, where interest rates are higher, you could always pay more to borrow an installment loan online. However, Texas installment loans come with an extended repayment period.
The best installment loans Texas has to offer spread your payments over several months. Each payment will be less than what you borrowed, so you never have to come up with the money all at once.
This extended delay can be more manageable when things are tight. But you won’t know until you sit down with your spending plan and crunch the numbers. Compare rates, terms and conditions to be sure.
If the short turnaround time of a direct payday lender is hard to match, consider the alternative. A payment schedule gives you more leeway, so you may find it easier to juggle your debt and other big bills.