Having bad credit in Utah can come with many adverse effects. Suddenly, life gets hard on almost every level. It may become more difficult to apply for a credit card, to get an apartment, to seal a cell phone contract, and to buy a car. You may even be forced to pay for higher insurance premiums.
If your credit score is low, you might be rejected by the mainstream banking system, leaving with financing options. One of which is a signature loan in Salt Lake City, Taylorsville, Sandy, or Provo.
You have probably heard of the more popular type of cash advance: the payday loan. But a signature loan is much better in every way.
Payday loans are secured, meaning you need to leave a kind of collateral that has value. In this case, a postdated check for the amount you need to borrow, plus the interest the lender charges. If you pay what you owe after the term, you get your check back. But if you do not, the lender cashes the check.
In other words, you need a checking account to qualify for a payday loan. If you do not have one already, you may encounter problems opening when you have plenty of unfavorable items in the ChexSystems report, to which over 80% of financial institutions have access. Also, having to open a checking account first defeats the purpose of applying for a quick cash loan.
On the contrary, signature loans are unsecured. The only thing you need to leave is your signature, which is a metaphor for your word, your promise to repay your debt.
A signature loan lender may conduct a background check only to confirm your identity and to prevent fraud, not to see how high or low your FICO score is.
Generally, payday loans are due within two weeks from the date of approval because that is how often Americans get paid. After all, these financial products exist to help a borrower get by until the next payday comes, hence their name.
But signature loans usually are much laxer. Lenders understand that they have no collateral on hand, so they are more willing to work with borrowers to avoid default.
You will not be hard-pressed to find signature loan lenders offering different payment options. Explain your financial situation, so a representative of the financial institution can help tailor the most suitable loan solution for you.
Yes, payday and signature loans may come with relatively higher interest to compensate for the significant level of risk lenders accept when extending credit. But since financial institutions providing signature loans tend to be more understanding and lenient, you can request to make your unsecured loan as manageable as possible to help ensure timely repayment.
The advantage of applying a signature loan is decreasing the need for you to apply again in the future. Some Utah lenders incentivize good borrowers by reporting their payment history to credit bureaus. If you pay on time and honor your word, you can slowly rebuild your credit.
Despite all the benefits of signature loans, they should not be abused. You should only apply for one if you really must, and you should never sign on the dotted line without exercising due diligence.