At a time when online loans for people with bad credit have become an essential tool to manage spending, this is no time for complacency. It is the combined responsibility of the state and those involved in the industry of short-term loans to make sure that the services offered will do more good than harm.
Based on the Safe Small-Dollar Loans Research Project conducted by the Pew Charitable Trusts, about 5.5% of US adults spend $7.4 billion on short-term loans annually. But a majority of borrowers use their loans for people with bad credit for purposes other than the most marketed – emergency cases.
Instead of using online loans for people with bad credit for medical emergencies, borrowers use such loans for recurring living expenses. Examples of these expenses include rent and utility bills. Short-term loans are pretty easy to access because of their no credit check requirement. That is why on the average, borrowers remain indebted for 5 months per transaction made.
It is then understandable that the demographics of the majority of those using loans for people with bad credit belong to the renters and divorcees. These are the people who would need more than what they’re earning just to cope with their monthly living expenses.
Because of the wide use of loans for people with bad credit, states have entered into agreement with lender to ensure that consumers get the best possible experience.
What Are the Points Included in the State-Lender Agreement?
Under the agreement, providers of loans for people with bad credit will:
•Give exact information on the price of the amount borrowed. The information should also include all fees and charges. Nothing should be hidden from you.
•Offer affordability checks to ensure payment before the loans for people with bad credit are rolled over. Remember that if you opt to extend your loans, you will be subject to another set of interest and fees.
•Freeze charges and other fees if the customer is in financial difficulty. Lenders understand that there could be instances that would hinder you from meeting all your financial obligations.
•Inform you in advance if a deduction is due to be made from your given bank account. This should give you enough time to fund your account or inform the lender where you took the loans for people with bad credit from to stop the scheduled deduction. If you intend to stop a deduction, inform your lender about 2 business days ahead.
Although the keynotes in the agreement are common practices, both lenders and borrowers need to be reminded. Loans for people with bad credit should be rebranded following the records of misunderstandings. Such loans are effective means to bridge a financial difficulty until the next payday. If they weren’t so useful, short-term loans wouldn’t be so popular today.
No matter how a lender markets its services, borrowers will always have their own reasons for taking loans for people with bad credit. As long as you choose a lender known for its honesty and professionalism, you should be able to enjoy your loan transactions. To be doubly sure, choose lenders that have been recognized by your state.