Also Read 5 Tips for Getting a Personal Loan with a Bad CIBIL Score

Understand the Types of Emergency Loans Available for Bad Credit

When an emergency strikes, it can be difficult to find the financial support you need, especially if you have bad credit. Luckily, there are emergency loans available for those in need, even with a less-than-perfect credit score. The two most common types of emergency loans are payday loans and personal installment loans. Payday loans are short-term loans that typically have high-interest rates but can provide quick cash when you need it most. Personal installment loans, on the other hand, are larger loans that are repaid over a longer period of time, typically with lower interest rates. It’s important to understand the differences between these types of loans so that you can make the right decisions for your financial situation. With the right emergency loan, you can get the support you need to weather any financial storm.

Research Your Options to Find the Best Loan for You 

When it comes to finding the right loan for your financial situation, it’s important to do your research and explore all of your options. With so many lenders and loan types available, it can be overwhelming to determine what will work best for you. However, taking the time to evaluate your specific needs and compare interest rates and repayment terms can lead you to the loan that is the best fit. Whether you’re in need of a personal loan, car loan, or home loan, there are options out there that can provide the financial assistance you need without breaking the bank. So don’t rush into a decision, do your due diligence and find the loan that’s right for you.

Also Read How to Get Out of Debt: Debt Management Services that Work

Make Sure You Can Afford the Loan Before Taking It On 

Before taking out a loan, it’s crucial to assess your financial situation to determine if you can truly afford it. Although loans can provide you with the funds you need, they can also escalate into a financial nightmare if you fail to manage them properly. Don’t let the excitement of obtaining funds cloud your judgment; take some time to review your income, expenses, and write off debt. Calculate how much you will need to pay back each month, and consider how that could impact your budget. By doing so, you’ll be able to make a more informed decision and avoid taking on more debt than you can handle. Remember, a loan can be helpful only if you can afford to pay it back.

Increase Your Chance of Approval by Improving Your Credit Score 

Your credit score plays a crucial role in determining your financial future. Whether you are looking for an instant loan for low cibil score, apply for a credit card, or even rent an apartment, a good credit score can make all the difference. Improving your credit score is not just about boosting your chances of approval, but also about gaining financial freedom and stability. By paying your bills on time, keeping your credit utilization low, and avoiding unnecessary credit applications, you can take control of your finances and increase your chance of approval. With dedication and effort, a good credit score can be within your reach.

Consider Alternatives to Emergency Loans 

When faced with unexpected expenses, emergency loans may seem like the only solution. However, it’s important to consider alternative options before signing on the dotted line. One option is to reach out to local non-profit organizations that offer assistance with financial hardships. Another option is to negotiate a payment plan with the creditors or service providers. Additionally, it may be helpful to consider adjusting your budget to help prevent future financial emergencies. By exploring different alternatives, you can avoid falling into a cycle of debt and find a solution that works best for you.

Know the Dos and Don’ts When Dealing With Bad Credit Lenders

Dealing with bad credit lenders can be a tricky situation if you don’t know what you’re doing. It’s important to know the dos and don’ts of dealing with these lenders to ensure that you are making the best financial decisions for yourself. DO shop around and compare offers from various lenders to ensure that you are getting the best deal possible. DON’T sign up for a loan that you know you won’t be able to pay back, as this will only worsen your credit score. DO try to negotiate with lenders to get better rates or payment terms. DON’T give in to lenders who pressure you into making a hasty decision. By following these dos and don’ts, you can navigate the world of bad credit lending and make informed decisions that will benefit your financial situation in the long run.

Emergency loans for bad credit should be accessed as a last resort. Loans can offer temporary relief in times of financial hardship, but it is incredibly important to make sure you can handle the loan financially before taking it on. Managing debt could worsen your situation so researching your options and finding the best match for you is key. Additionally, explore other alternatives as these might be more suited to your circumstances. Knowing the dos and don’ts when dealing with bad credit lenders is also paramount in order to protect yourself from predatory practices. While this knowledge won’t always guarantee that you are approved for the loan – even improving your credit score won’t guarantee approval – it may increase the chance of approval or suggest an alternative solution for a bad credit emergency loan. Ultimately, access to financial help through debt settlement companies can be a lifeline, but weigh up all your options carefully first and take care to protect yourself from scams or harsh repayment terms.

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• The complainant, Vibhu Bhakru, had taken a credit card from the Opposite Party, Standard Chartered Bank in 1999 and had been very regular and prompt at payments.
• On 24.02.2004 an invoice was sent to the complainant demanding payment of Rs.750/- charged on account of renewal. The complainant requested redemption on the points accumulated under the reward scheme by the bank against the renewal charges of which he was assured.
• The credit card duly expired in February 2004 but he was not issued the renewed card. He made several calls to customer care which were unhelpful.
• In May 2004, he was shocked by a telephonic call from an agent of the bank demanding payment of Rs. 28,000/-. Any explanation that he had not used the card after Jan 2004 had fallen on deaf ears after which he was visited by agents who demanded payment towards credit card usage.
• He filed another complaint with customer care but was again demanded payment of Rs. 28,000/-. After a dispute declaration by the Bank in March/April 2004, the complainant started receiving threatening calls. Despite several attempts to mediate the misunderstanding, he once again received a threat on 11.12.2004 for the collection of a levy of 20% on the outstanding if the payment was not made within 20 days.
• The bank claimed the complainant as frivolous who was filed with intentions of unjustly enriching himself at the expense of the OP Bank.

Judgement

The Commission imposed punitive damages of Rs.10 lacs deposited in favor of state consumer welfare fund and Rs.20, 000/- as compensation towards the complainant for trauma, mental agony, and harassment, loss of reputation and loss of creditworthiness.

Learnings from the case

Banks and financial institutions that provide loans and credit cards are not to resort to methods that have no legal back up. They are not to use abusive and threatening languages on the telephone and are most certainly not to visit the residence of consumers. They should keep a record of all the transactions between them and the customer and not demand unfair compensation.

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An important feature of credit cards is the option of paying minimum amount due. If any individual falls short of funds, they can pay the minimum amount offered on the credit card and avoid penalties. However, it is easy to fall into a debt trap if one uses this facility for a long time.

What is minimum amount due?

It is the minimum amount that a person is required to pay on or before the due date of payment to maintain the card account. Minimum amount due is usually calculated at 5% of the outstanding balance. Any unpaid amounts from previous bills also get added to the current minimum amount due. It also gets higher if the cardholder bought something on EMI through the card or spent more than the credit limit.

Most credit cards charge an interest rate of 3% per month which is equivalent to 36% annually. Banks keep levying interest on the outstanding amount left after the payment of the minimum amount. Since the interest rate is very high, most of the minimum amount paid goes towards interest charges and the outstanding amount is reduced marginally.

Let us take an example. Say an individual has an outstanding balance of Rs.50,000 and pays the minimum for each month- the minimum amounting to at least Rs.2000. In this case, it will take a minimum of 44 months for the entire outstanding amount to be paid in full, assuming that there are no more transactions done on the card.

Though the interest on the bill outstanding amount is not waived, minimum amount helps one avoid late payment fee which usually ranges between Rs.100- Rs.1000.

If an individual chooses to pay the minimum amount due, they do get temporary relief but a habit of paying minimum amount every month will result in the total bill multiplying quickly.

What happens if a person chooses not to pay the minimum amount?

A person choosing not to pay the minimum amount of due will be charged an additional fee, interest, and other charges. There may also a possibility of suspension of the card when the dues cross the credit limit. Not to mention that the effect on the creditworthiness and the credit score will make it harder to get loans in the future.

Paying the minimum is okay if it is for genuine reasons and used once in a while. Ideally one should not use more than 50% of their credit limit in a month as credit card spending usually comes with a risk of overspending and it is easy to fall int a debt trap.

Want to get out of debt trap? Register and talk to our counsellors for credit card settlement

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