Not all bad credit loans are good for you. There are certain short term bad credit loans which will do a lot of harm for you when you are already reeling in debt. It is better to stay away from such loans to reduce your burden. Some of the bad credit loans to stay away from are -
You can secure a payday loan as long as you have some sort of an income. You only have to show a proof of this to obtain a loan. Small time lenders will then be able to give you small loans with an interest rate. In most cases, the payback time of this is two weeks. In the case that you have borrowed $500, then you will owe them $575 in two weeks. If you are earning only $750, then you will be left with just $175 to take care of you and your family’s expenses. You will have to fend for yourself with this till you get your next salary which might prove to be quite a difficult position. More than providing a temporary solution this short term bad credit loan becomes a burden.
Auto Title Loans
Most credit card debt negotiators and other financial experts will tell you that this is one of the worst bad credit loans available for debtors today. This involves very high cost loans which are usually for a short period of time. In the case that you have defaulted a payment then you end losing the title of the vehicle with the money you paid till then. The lender takes repossession of the vehicle after this.
Mobile Home Loans
This type of home loan is a way to increase your financial burdens as the interest rates are very high. It is always better to negotiate your credit card debt and reduce your current bad credit with financially sound loans than ones like a mobile home loan as it is a very expensive loan these days. These loans are not similar to mortgage loans as the interest rates are higher here. Mobile home loans also cover the land cost, but for people with bad credit this might not be the best option.
As it is typical with most of the other bad credit loans, this loan also involves higher years of repayment and very high interest rates. Typically this loan should not exceed about 5- 6 years, which is the normal time that people use a new vehicle. However, auto loans are for very long periods of time. At some times you might end up paying the high rates of interest even after you have got rid of the vehicle which is a big disadvantage here. These high rates of interest will end up increasing the amount of money you spend repaying the loan. For someone who is already in debt, this might be a bigger burden and an unhealthy option.