Installment lending companies receive some criticism because their borrowing opportunities are connected with relatively high interest rates. The companies say they must charge those rates because they are lending to people with poor credit or no credit history, and thus are taking on more risk than traditional lenders. People who have been able to rely on an organization like Blue Trust Loans when emergency cash is needed are glad to have this option.
Credit and Employment Issues
Prospective borrowers who have had problems with credit in the past typically are not eligible for a loan with a bank or other traditional lender. Their credit score is too low to qualify. They may not have been with a place of employment long enough, according to the organization’s guidelines.
Affording the Loan Payments
Installment loans are generally intended to be a short-term solution to a pressing problem, not a borrowing opportunity to finance a vehicle or go on vacation. The borrower has to be certain that the payments for this loan will fit into the budget. For low-income individuals, this isn’t always feasible. If they don’t make a plan as to how to pay the loan back, they may be at risk of default. Being able to afford installment payments might mean picking up some extra work, selling some valuables or cutting expenses. Reducing expenses can be difficult, however, for someone who is already struggling to make ends meet.
Nevertheless, not being able to handle the financial emergency can lead to much worse problems. One of the more common examples is a broken-down car, which may remove the only way someone has to get to work. If this person doesn’t have a credit card, it may be difficult to find another way to pay for the repair work.
The Shortest Arrangement
Being able to afford the payments is crucial. The other side of the coin is setting up a payment arrangement for as short a term as the person can afford, since that keeps finance charges lower. A high interest rate is not necessarily so troubling if the actual total amount of payments is not exorbitant.