Only those people who are fortunate to have large amounts of savings or those that pay for insurance on their mortgage and loans are able to cope when a financial crisis affects their lives. And even then, the loss of income from unemployment or sickness can soon eat up a family’s savings when used to pay for the regular expenses and mortgage payments that were normally covered by the person’s salary. When payments are missed or delayed the consequences are that black marks are recorded on the person’s credit history and their credit score suffers.
When this situation occurs borrowers will find it tricky trying to get future credit approved even after their there loss of income has passed and their income is beck to its normal level. What do people in this situation do? In recent years they have been turning to alternative lenders who will consider people with bad credit. These sub prime lenders provide products such as bad credit mortgage loans to consumers who are having trouble financing a property. Another very common form of lending are the many variations of no credit check loans that they provide, they are commonly called payday loans and other such terms.
When using sub prime lenders for these services, it may seem like the answers to all your prayers after everyone else is refusing you credit. But don’t be deceived they are not providing their services out of the goodness of their heart. They are in it to make a healthy profit out of their customers by charging high interest rates. This covers the risk that is associated with lending to consumers with bad credit as they are more likely to default on their repayments.
So unless you don’t have any other options then these types of lenders should be avoided when possible. If they are your only option then tread carefully.