Credit problems can act as a hindrance for many people in managing their financial matters. It becomes somewhat difficult for them to manage all the cash flow needs especially if they are short of cash at any time. Sometimes it is just the timing of pay checks and monthly payments, while other times there may some emergency that people have to deal with. So it becomes necessary to find additional funds through loans so that they can balance their cash flow needs and pay all of their monthly bills on time.
These loans are called bad credit loans and provide great help to borrowers. Whether you are a company or an individual, cash flow is all important. If you do not have enough money i.e. cash, to pay your bills when they become due, to buy groceries etc. life can be very difficult and will get worse as fees and additional interest add up. Managing your cash flow in a manner that you always have money available to meet your commitments is paramount, if you are going to avoid further credit issues. We will explore a few of these issues in this post.
Applications for a Bad Credit Loan
Applying for a bad credit loan can be an easy way to brush off credit problems. For example, if your income in any given month is $2500 and your cash expenses are $2300 each month then you have $200 left over for surplus spending needs. As long as this situation exists most consumers will be fine. But every once and awhile an emergency comes along that needs to be dealt with and this can mean your $200 surplus is not enough and you need a loan just to make it through the week.
If you have bad credit, obtaining a bad credit loan or any kind of loan for that matter, may be difficult, but there are lenders available who are willing to lend money under these circumstances. A loan to help deal with an emergency like this can quickly solve your credit problems and you cash flow problem. Consumers should always make sure that they can afford to make the monthly payment that is required, or if it is a pay check loan, that you will be able to repay the loan in full when you receive your next pay check.
Using Credit Cards as Short Term Loans
An alternative to a bad credit loan is to use credit cards to get you through the cash flow shortage. If you allow the balance to build up with an unpaid balance the interest rate and charges are going to be much higher than the interest charged for a bad credit loan. Consumers are always better off to apply of a loan vs. not pay their credit cards in full each month due to the high interest rate that credit cards charge. Credit card interest rates can be as high as 18% to 19% or even higher.
Most people will find that their credit card interest rates will be as high as 18% or higher in the case of store credit cards which can be as high as 29%. Interest rates for bad credit loans will vary, depending on the lender and the credit rating of the borrower; however they will be less than the rates charged by the credit card companies unless you are dealing with a pay day loan vender or some of the other small loan short term lenders. These types of loans can have much higher APR’s.
Writing Checks With Insufficient Funds in Your Account
When consumers are having a tight cash flow problem, a loan can be an easy way to brush off credit problems for another reason. Sometimes when cash is tight, consumers will miscalculate the money in their account and write a check when there is insufficient money in their accounts. Unless they have over draft protection on their bank account, the bank is not going to pass the check.
They will return it to the bank where it was cashed. In this situation, your bank will charge a fee for insufficient funds and likely the person or company you gave the check to in the first place is going to also charge a bad check fee. All of these fees can really add up in a hurry, to the point that it may not be worth taking a loan at this stage. Management of your cash flow and management of the cash in your bank account is key to avoiding these kinds of problems.
These fees and problems with credit and cash flow can all be avoided by applying for and being approved for a bad credit loan. Don’t leave it too long before you apply if you want to avoid cash flow problems and also brush off your credit problems. Pay careful attention to the amounts in your bank account and forecast what expenses that you will have over the next week or so.
Budgeting Your Cash Flow
One way to forecast your cash flow is to first of all take your current balance in your account. Add to this amount any deposits which are not yet reflected in your account. This could be your pay check that will be deposited tomorrow or within the next week. Next subtract any amounts that you know for sure will be deducted from your account over the next week. This could include checks that you have written and has not been deducted from your account. Include any automatic payments such as utility payments, rent payments, etc that will be deducted from your account.
If you still have a positive number, you have some money to work with over the next week and you may not need to borrow any money. On the other hand if you are in a negative position, this could spell trouble for your cash flow situation unless you take some action and deal with this negative cash flow. You may need to arrange for one of the checks you have written to be delayed or you may need to deposit any cash you have in your wallet to cover the difference. If that does not work than a pay day loan or a bad credit loan may be needed to cover the difference and avoid and cash flow problems.
Once you have the next week under control, follow the same process for the upcoming month to determine if there is going to be a time during the month that you will need to balance your budget and reduce your expenses or apply for a short term loan.