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Three Common Stories of Guaranteed Loans
If you have said to your friends that you are looking into guaranteed loans, you may find that they are trying to talk you out of it. While there are risks to this short term lending option, many stories that people have heard are just stories. You should check the truth before you start writing off this type of lending.
Guaranteed Loans Ruin Your Credit Rating
This is something that many people will hear because the truth is that they can ruin your rating. However, what you need to remember is that any type of loan or form of credit can ruin your rating if you are not sensible with it. It is possible that guaranteed loans will help you with improving your credit rating because there is no need to state why you want the loan.
As long as you pay the full amount off from the guaranteed loans at the end of the month, you will be able to prove that you are a sensible borrower and you can be trusted with money. This is something that lenders will look for when it comes to loaning you other types of loans.
However, if you do take too many guaranteed loans out in a short space of time, you can do a lot of damage to your credit rating. This will make it look like you are overstretching your budget – which you probably are – and will make other lenders turn you down for credit at a later date; they will be worried that you will not be able to afford the loan and that you will default on payments.
You Can Only Get a Loan if You Are Employed Full Time
This is the case with some guaranteed loans but not all of them. It is all about shopping around for the best deals going. There are some companies that will not be able to risk loaning to those who are not in a permanent and full time employment but there are others that will be happy to loan to those who are currently unemployed.
You Will Have to Pay High Interest Rates
This is a very common point that you will hear your friends telling you and part of this is true. The APRs from these companies are in the thousands but that is for those who let the loan overrun. As long as you pay the money back on time, you will only have to pay a small and affordable fee. This fee is usually around about the same as your credit card over the limit fee or charges for setting up an overdraft.
The problem is that you may find you can avoid paying any charges and you will not actually need guaranteed loans. It is possible to get an extension on your credit limit if you really need to. If your credit rating is good, you may be able to have your overdraft organised for no charge; this will also depend on how good your relationship is with your bank.