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Pay later, not never: What ‘buy now, pay later’ spells for consumer debt and the easy credit business model, Brunch

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There’s a new way to borrow at the checkout counter, and it’s finding favour with shoppers on a tight budget. Termed “buy now, pay later” (BNPL), these interest-free, short-term payment plans have captured a sizeable audience in credit-starved, cash-strapped millennials and Gen Zs. From sneakers and skincare products to coffee machines and ergonomic chairs, purchases can be split into instalments at checkout – both online and in stores – on a range of everyday items, effectively offering credit terms to those who do not have, or cannot get, a credit card.

BNPL pioneer Klarna is now the highest valued fintech in Europe with a valuation of over US$10.6 billion. Australia’s first mover Afterpay recently doubled its full-year revenue to A$519.2 million (S$497.8 million) for the financial year ended June 30, 2020.

Singapore has seen its fair share of homegrown BNPL providers as the trend gathers steam in Asia amid Covid-19 uncertainties.

Founded in 2016, Rely is the first fintech to set up shop here. Its rival, hoolah, launched over a year later. Other players Atome and OctiFi joined the race this year. Meanwhile, incumbent banks have also launched interest-free BNPL solutions on top of credit card offerings.

A recent report by Worldpay from FIS found that BNPL is one of two online payment methods forecast to gain global market share between now and 2023, with the other being digital and mobile wallets. Across the Asia-Pacific, e-commerce transactions using BNPL are also expected to more than double by 2023.

About 38 per cent of Singaporeans, or 1.1 million people, have used a BNPL service, according to a separate report by financial comparison platform Finder.

BNPL’s “zero interest” hook is certainly reshaping the way we view instalment loans, lending a much-needed rejuvenation to the retail scene. The service is layered on top of a customer’s existing debit or credit card and is not restricted to banks that offer instalment plans. But of course, nothing is as good as it seems.

Industry watchers flag risks of a false sense of affordability and hidden late payment charges that could introduce bad debt.

These observers also question the credit risk assessment capabilities of BNPL providers here; most do not have access to the wealth of consumer and enterprise data that banks do.

And the scalability of BNPL business models remains to be seen. In offering zero interest, these firms make money by taking a cut from their merchants’ revenue sales and charging consumers late payment fees.

“For now, it is viable as long as merchants see value in increased shopping cart conversion and the share of fees charged by BNPLs is manageable,” says Shirish Jain, director at PwC’s strategy consulting arm, Strategy&. “Of course, that is till the next innovative alternative comes to the marketplace.”

Easy, instant access

The concept of BNPL is not all new. Interest-free instalment plans for credit card purchases have long been offered by banks, and are often used for big-ticket items such as furniture and home appliances.

But what propelled BNPL providers Klarna and Afterpay into billion-dollar businesses was the speed and ease at which they extend credit.

These include near-instant approval of credit, no price shock or perceived lack of interest rate shock, and overall convenience of finance in the moment of “want”, Mr Jain tells The Business Times.

Banks typically undertake extensive levels of credit scrutiny and require proof of income before extending credit to consumers. But BNPL players take a “lighter touch approach” in evaluating credit-worthiness.

This means no credit checks, no debt discussions, no income assessment, and no having to submit minimum three months of payslips, among others.

From a customer’s perspective, this provides a much faster, simpler and better experience, says KPMG partner Umair Hameed.

Anyone above the age of 18 can create a BNPL account with providers like hoolah and start shopping in instalments almost immediately.

These firms are able to tap into a wider net of consumers by providing credit for smaller amounts, and having lower requirements for information, says Ho Kok Yong, financial services industry leader at Deloitte.

In countries where BNPL services have been successful, they were able to enable outcomes that weren’t possible from the incumbents, he adds.

In Singapore, BNPL’s key customer segment is between ages 18 and 35, with an average order value of around S$200 to S$300. Maximum transaction limits vary. Rely, for instance, puts a S$1,000 cap on debit card purchases, and a S$4,000 limit on credit card transactions.

There are also no annual account fees for BNPL services in Singapore for now, compared with most credit cards.

Flexible financing

Local BNPL players OctiFi, hoolah and Atome divide the cost of a purchase into three interest-free, equal monthly payments for its customers.

With Rely, shoppers have the option to pay in four payments due every two weeks, or pay in three monthly instalments.

In Asia where 80 per cent of consumers are price-sensitive, the ability to make small payments over a short period of time – sans the cost and longer-term commitment of credit cards – is alluring.

A Singtel survey found that 41 per cent of buyers abandon their carts because they are not ready to purchase, while 25 per cent of buyers don’t check out because of high prices.

This represents part of the addressable market for Singapore’s BNPL providers, says Siska Melinda, associate at consultancy Frost & Sullivan in Asia-Pacific. She projects for a 20 to 40 per cent increase in the number of orders and average spend due to BNPL adoption.

It further helps that consumers in Singapore are open to innovation and reward convenience with loyalty.

The growing use of relatively new digital payment methods such as GrabPay, ApplePay and PayNow is testament to that. There is also a shift away from traditional forms of credit, says Zhi Ying Barry, senior analyst at Forrester.

One can almost draw a parallel to the transport market, where consumers have responded well to ride-sharing apps amid a well-established taxi system, PwC’s Mr Jain adds.

As consumer income takes a hit in the wake of the pandemic, instalment plans may appear more attractive as they enable consumers to spread their expenses over a longer period, says Deloitte’s Mr Ho.

hoolah claims that transaction volumes have grown over 700 per cent year-to-date, with topline sales up more than 350 per cent.

During the circuit-breaker period, Rely’s online merchants were making two to three times of their usual volumes. Consequently, the firm has been taking a larger cut from its merchants’ sales revenue, says Rely CEO Hizam Ismail.

A fresh report by payments firm Adyen found that 54 per cent of Singaporeans surveyed plan to shop more online despite the easing of restrictions, higher than their global (36 per cent) and Hong Kong counterparts (47 per cent).

Atome, the consumer arm of digital bank hopeful Advance.AI, says that its 1,000-odd merchants have seen a 20 to 30 per cent increase in conversions, and as much as a 30 per cent increase in average order size.

Debt trap

“Say goodbye to high interest rates and escalating debt,” reads a line on OctiFi’s website.

“Get what you need now, pay only 1/3 upfront,” reads another on hoolah’s platform.

Much of BNPL marketing material tends to focus on the value to be derived from a purchase and not necessarily on the affordability of a customer to pay back, KPMG’s Mr Hameed tells BT.

BNPL services may give consumers, especially those whose credit profiles may otherwise disqualify them from conventional credit products, a false sense of affordability and encourage them to over-commit with multiple instalment plans, warns Deloitte’s Mr Ho.

Fresh data from Finder showed that 27 per cent of 1,008 Singaporeans surveyed admit to being financially worse off when using a BNPL service, with impulse buying being the most common mistake. About 11 per cent also said they have overstretched their budget so far that they struggled to pay for other expenses.

A separate OCBC survey found that 41 per cent of millennials in Singapore struggle to stick to their savings plan. Only 66 per cent managed to stick closely to their The ease with which younger consumers can access credit also raises valid concerns. OctiFi and hoolah’s minimum user age is 18, while Rely sets 21 as its minimum age.

Younger consumers are more likely to walk into unsuspecting debt traps, exacerbated by lower levels of financial literacy.

“Will they turn to their parents for help? Or will they take up more loans to pay off their debt? There will be some who will ignore the problem because they’re scared, and things will only get out of hand,” says Tan Huey Min, general manager at Credit Counselling Singapore.

She adds: “Sellers should be more responsible and maybe prompt customers to do a bit more thinking before they check out. But of course, as sellers, it’s not to their benefit.”

It doesn’t help that penalties on late payments are not upfront. Checks by BT found that most BNPL fee structures are buried in lengthy T&Cs. It’s not easy to find such information on most BNPL websites, unless a user specifically looks up “late fees” on Google.

BNPL fintechs in Singapore are, for now, not held to the same regulatory standards as banks. They are not licensed under the Payments Services Act or the Moneylenders Act.

“They may tell you that there’s a fee if you miss a payment, but they may not always tell you about the additional interest they may charge, or how the fees accumulate,” says KPMG’s Mr Hameed.

For example, Atome will freeze a customer’s account and charge a S$20 admin fee if an instalment payment is missed. If this admin fee and outstanding payment are not paid within seven days, an additional S$10 fee is imposed.

hoolah charges a S$15 late payment fee each time a customer fails to pay on time. This applies to order values between S$100 and S$999.99, and is subject to a cap of S$60, which works out to 6 per cent of a S$1,000 purchase but 60 per cent of a S$100 buy.

Given that BNPL providers do not charge interest on credit, penalty fees are a sizeable contribution to revenue and an important source of cash flow, says Deloitte’s Mr Ho. Australia-based Afterpay’s latest full-year revenue of A$519.2 million includes A$69 million from late fees. In Singapore, about 9 per cent of those surveyed by Finder have had to pay a late fee.

Managing credit risk

While the easy credit is both a boon and hidden danger for consumers, BNPL providers face the dual challenge of credit defaults from their consumer customers as well as merchant fraud.

To measure consumer credit risk, lenders typically resort to demographics and behavioural aspects such as occupation, residence, income, outstanding debts and credit history, says Arun Baid, global delivery head for banking, financial services and insurance at Cognizant.

But BNPL’s key market of young millennials may not have built a credit history yet.

The inherent risks of BNPL business models are high as their services are more likely to appeal to consumers with weaker credit profiles, Deloitte’s Mr Ho tells BT.

BT understands that most BNPL players in Singapore built their risk management systems in-house and conduct assessments internally. They have also tried to minimise bad credit risk by applying a credit limit to each customer.

Considering their limited scale, it is “highly unlikely” for BNPL firms to build a sophisticated in-house credit rating system like that of China payments giant Ant Group, says Frost & Sullivan’s Ms Melinda.

She reckons it could be possible to compile data from BNPL providers and build a centralised national database for credit scoring. “But this approach might not happen unless the government makes it compulsory through regulations.”

Regulatory grey areas in the Singapore finance scene do little to ease the concerns of industry watchers. The Monetary Authority of Singapore (MAS) declined to comment when contacted by BT.

If these firms are conducting straight lending to consumers, they would come under the Moneylenders Act or the Hire Purchase Act under the Ministry of Law. They could also come under the Payments Services Act if deemed to be providing one of the seven regulated payments activities set out by the MAS. Under the Act, licensed entities are prohibited from lending to individuals in Singapore.

But if BNPL fintechs are providing funding to merchants for them to in turn provide deferred payments to consumers, these firms would likely be exempt from regulation, says Deloitte’s Mr Ho.

Depending on the uptake of BNPL schemes, the government could become more concerned about financial stability and prudence and may over time require closer monitoring or restrictions on BNPL activities, he adds.

Globally, new-age lenders have started complementing traditional risk assessment models with consumers’ psychometric or social behaviours, by combining data from official sources and social media platforms, says Cognizant’s Mr Baid.

To manage merchant fraud risk, Atome CEO David Chen tells BT it leverages its parent firm Advance.AI’s tech and database of over 800 enterprises in the region to manage assessment issues like risk underwriting.

Staying alive

In providing near-identical solutions, BNPL players compete fiercely with each other, raising question marks over their long-term survival.

Incumbents are also alive to the trend. UOB’s SmartPay! feature, for instance, allows customers to convert credit card bills or selected transactions to interest-free instalments over six or 12 months with a one-time processing fee.

“The BNPL business model does not have a high entry barrier and is relatively easy to replicate. BNPL startups had better look for extensions of their services to add more value to consumers,” says ESSEC Business School professor Jan Ondrus.

These firms can look differentiate themselves in three key areas. Firstly, customer loyalty can be built by complementing BNPL with cashback or rewards that encourage repeat purchases. The variety of merchants is the second key differentiator, says Phil Pomford, Worldpay global e-commerce general manager.

The last point would be how and where firms make BNPL available, such as through overlay services like automated payment scheduling, QR code and cross-border payments to offer more convenience, as well as being omnichannel, Mr Pomford adds.

hoolah recently extended its BNPL services to physical stores in Singapore. It also integrated with national authentication system SingPass and introduced a one-click express checkout for online payments.

Rely’s merchant strategy is to acquire more enterprise retailers to bump up payment volumes. It counts e-commerce platform Qoo10 as a partner, with more “big names” expected in 2021, says its CEO, Mr Ismail.

“BNPL startups can only survive if they capture enough customers who regularly spend a large sum of money,” ESSEC’s Prof Ondrus notes.

Considering Singapore’s population size, it is unlikely for local BNPL players to match the scale of Klarna and Afterpay unless they build a regional presence, Frost & Sullivan’s Ms Melinda tells BT.

hoolah has since expanded into Malaysia and Hong Kong, with an eye on Thailand and other parts of North Asia in the next six to 18 months. Atome’s BNPL services are available in six Asian markets, with plans to move into Thailand soon.

Meanwhile, their regional competitors are already fired up. In Indonesia, established fintechs Ovo, Gojek, Shopee and Traveloka have all launched BNPL services. The Philippines’ BNPL startup BillEase has over 350,000 user accounts, while rival Cashalo saw 6.5 million app downloads since 2018.

“Expansion to other countries will not be easy, due to the availability of existing competitors with similar business models,” says Ms Melinda.



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Bad Credit

How to Get a Personal Loan Fast

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Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

If you’re facing a financial emergency and don’t have enough money set aside in savings to cover the expenses, emergency loans might help.

These are personal loans with quick funding times to quickly get you the money you need.

Here’s what you should know about emergency loans and how to get them:

Emergency loans

There are several lenders that offer emergency loans. Keep in mind that you’ll likely need good credit and verifiable income to qualify, though some lenders have less strict requirements than others.

Here are Credible’s partner lenders that provide emergency loans:

Avant

With Avant, you could get a personal loan up to $35,000 with funding as soon as the next business day. Avant could also be a good choice if you’re looking for a personal loan for bad credit.

  • Rates: 9.95% – 35.99% APR
  • Loan terms (years): 2, 3, 4, 5*
  • Loan amount: $2,000 to $35,000**
  • Fees: Origination fee
  • Discounts: Autopay
  • Eligibility: Available in all states except CO, CT, HI, IA, NV, NY, VT, and WV
  • Min. income: $24,000
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. credit score: 580
  • Time to get funds: As soon as the next business day (if approved by 4:30 p.m. CT on a weekday)
  • Loan uses: Debt consolidation, emergency expense, life event, home improvement, and other purposes

Avant personal loans review

*If approved, the actual loan terms that a customer qualifies for may vary based on credit determination, state law, and other factors. Minimum loan amounts vary by state.

**Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33.

Axos

Axos offers personal loans for up to $35,000 with time to fund as soon as the next business day. To qualify for a personal loan with Axos, you’ll generally need good to excellent credit.

  • Rates: 6.49% – 29.99% APR
  • Loan terms (years): 1, 2, 3, 4, 5
  • Loan amount: $5,000 to $35,000
  • Fees: No prepayment penalty
  • Discounts: None
  • Eligibility: Available in all 50 states
  • Min. income: Does not disclose
  • Customer service: Phone
  • Soft credit check: Yes
  • Min. credit score: 740
  • Time to get funds: Next business day
  • Loan uses: Debt consolidation, home improvement, and other purposes

Axos Bank personal loans review

Best Egg

Best Egg loans are available for up to $35,000 and are typically funded in one to three business days after verification. You might also be able to qualify for a lower interest rate with Best Egg than you’d get with a traditional lender.

  • Rates: 5.99% – 29.99% APR
  • Loan terms (years): 3, 5
  • Loan amount: $5,000 – $35,000
  • Fees: Origination fee
  • Discounts: None
  • Eligibility: Available in all states except DC, IA, VT, and WV
  • Min. income: None
  • Customer service: Phone
  • Soft credit check: Yes
  • Min. credit score: 640
  • Time to get funds: As soon as 1 – 3 business days after successful verification
  • Loan uses: Credit card refinancing, debt consolidation, home improvement, and other purposes

Best Egg personal loans review

Discover

Discover offers several types of financial products, including personal loans ranging from $2,500 to $35,000. With a Discover personal loan, funds could be sent as soon as the next business day after acceptance.

  • Rates: 6.99% – 24.99% APR
  • Loan terms (years): 3, 4, 5, 6, 7
  • Loan amount: $2,500 – $35,000
  • Fees: None as long as you pay on time
  • Discounts: None
  • Eligibility: Available in all 50 states
  • Customer service: Phone
  • Soft credit check: Yes
  • Min. credit score: 660
  • Time to get funds: Funds can be sent as soon as the next business day after acceptance
  • Loan uses: Auto repair, credit card refinancing, debt consolidation, home remodel or repair, major purchase, medical expenses, taxes, vacation, and wedding

Discover personal loans review

LendingPoint

LendingPoint loans are generally geared toward borrowers with poor or fair credit, which could make it easier to get approved. With LendingPoint, you can borrow up to $25,000, with funding as soon as the next business day.

  • Rates: 15.49% – 35.99% APR
  • Loan terms (years): 2, 3, 4
  • Loan amount: $2,000 to $25,000
  • Fees: Origination fee
  • Discounts: Autopay
  • Eligibility: Available in all states except CO, CT, HI, MA, MD, NV, NY, VT, WV, and WY
  • Min. income: $35,000
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. credit score: 585
  • Time to get funds: As soon as the next business day
  • Loan uses: Home improvement, consolidate debt, credit card refinancing, relocate, make a large purchase, and other purposes

LendingPoint personal loans review

LightStream

If you need a larger personal loan, LightStream could be a good option. LightStream offers personal loans up to $100,000 and funding potentially as soon as the same business day.

  • Rates: 3.99% – 19.99% APR
  • Loan terms (years): 2, 3, 4, 5, 6, 7 (up to 12 years for home improvement loans)
  • Loan amount: $5,000 to $100,000
  • Fees: None
  • Discounts: Autopay
  • Eligibility: Available in all states except RI and VT
  • Min. income: Does not disclose
  • Customer service: Phone, email
  • Soft credit check: No
  • Min. credit score: 660
  • Time to get funds: As soon as the same business day
  • Loan uses: Credit card refinancing, debt consolidation, home improvement, and other purposes

LightStream personal loans review

LightStream disclosure

Upgrade

Upgrade is another lender willing to work with borrowers with less than stellar credit. You could get a loan up to $35,000 with Upgrade, with funding as fast as a day of clearing verifications.

  • Rates: 7.99% – 35.97% APR
  • Loan terms (years): 3, 5
  • Loan amount: $1,000 to $50,000 ($3,005 minimum in GA; $6,005 minimum in MA)
  • Fees: Origination fee
  • Discounts: Autopay
  • Eligibility: Available in all states except IA and WV
  • Min. income: Does not disclose
  • Customer service: Email
  • Soft credit check: Yes
  • Min. credit score: 580
  • Time to get funds: Within a day of clearing necessary verifications
  • Loan uses: Debt consolidation, credit card refinancing, home improvement, and other purposes

Upgrade personal loans review

Upstart

Loans from Upstart are available from $1,000 to $50,0005. With Upstart, you could get your funds within one to three business days.

  • Rates: 8.13% – 35.99% APR4
  • Loan terms (years): 3 to 5 years4
  • Loan amount: $1,000 to $50,0005
  • Fees: Origination fee
  • Discounts: None
  • Eligibility: Available in all states except IA and WV
  • Min. income: $12,000
  • Customer service: Phone, email
  • Soft credit check: Yes
  • Min. credit score: 600
    (in most states)
  • Time to get funds: As soon as 1 – 3 business days6
  • Loan uses: Payoff credit cards, consolidate debt, take a course or bootcamp, relocate, make a large purchase, and other purposes

Upstart personal loans review

4The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 15% and 36 monthly payments of $33 per $1,000 borrowed. There is no down payment and no prepayment penalty. Average APR is calculated based on 3-year rates offered in the last 1 month. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.

5This offer is conditioned on final approval based on our consideration and verification of financial and non-financial information. Rate and loan amount are subject to change based upon information received in your full application. This offer may be accepted only by the person identified in this offer, who is old enough to legally enter into contract for the extension of credit, a US citizen or permanent resident, and a current resident of the US. Duplicate offers received are void. Closing your loan is contingent on your meeting our eligibility requirements, our verification of your information, and your agreement to the terms and conditions on the www.upstart.com website.

6If you accept your loan by 5pm EST (not including weekends or holidays), loan funds will be sent to your designated bank account on the next business day, provided that such funds are not being used to directly pay off credit cards. Loans used to fund education related expenses are subject to a 3 business day wait period between loan acceptance and funding in accordance with federal law.

Learn More: Where to Get a Personal Loan

How to qualify for an emergency loan

Qualifying for a personal loan for emergencies is similar to getting approved for most other loans. The lender will typically consider your credit history, income, and ability to repay the loan in the future to determine if you’re eligible.

Here are a few ways you could improve your odds of loan approval:

  • Avoid taking out other new credit
  • Keep your credit card balances low
  • Make any existing loan payments on time
Tip: If you have bad credit or no credit, you might be able to qualify for a personal loan with a cosigner. Having a creditworthy cosigner could help you get approved or could get you a lower interest rate than you’d get on your own.

Not all lenders allow for a cosigner on personal loans though, so be sure to check.

Just keep in mind that a cosigner is legally responsible for the loan if you can’t make our payments.

Learn More: No Credit Check Personal Loan

How to compare emergency loan lenders

While personal loan lenders might look similar on the surface, it’s important to compare them to find a loan that fits your needs.

Be sure to consider as many lenders as possible when searching for an emergency loan. A few important factors to consider include:

  • Interest rates
  • Repayment terms
  • Any fees charged by the lender (such as origination fees)

Before you borrow, estimate how much you’ll pay for a loan using our personal loan calculator below.

Enter your loan information to calculate how much you could pay

Total Payment
$

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With a
$
loan, you will pay
$
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$
over the life of the
loan.


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Compare rates without affecting your credit score. 100% free!

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How to apply for an emergency loan

While emergencies are tough situations, getting an emergency loan doesn’t have to be. Follow these four steps to apply for an emergency loan:

  • Shop around and compare lenders: Start by looking for lenders that could meet your needs. Consider credit and income requirements as well as interest rates and loan limits. This way, you can likely narrow down your list of potential lenders.
  • Fill out the application: Once you decide which lender you like best, you’ll need to complete a full application for the loan. You might also need to submit documentation, such as proof of income.
  • Get your funds: If your loan is approved, the lender will send you your funds. The fastest way to get funds in many cases is through a direct deposit.

If you’re ready to find your loan, Credible can help you streamline the process. With Credible, you can see your prequalified rates from multiple lenders in just two minutes after filling out just a single form.

Ready to find your personal loan?
Credible makes it easy to find the right loan for you.

  • Free to use, no hidden fees
  • One simple form, easy to fill out and your info is protected
  • More options, pick the loan option that best fits your personal needs
  • Here for you. Our team is here to help you reach your financial goals

Find My Rate
Checking rates won’t affect your credit

Be careful with other types of emergency loans

If you’re facing an emergency, you might be tempted by other types of fast-access loans, such as:

  • Payday loans are unsecured, short-term loans designed to be paid back by the next payday. While they typically don’t require a credit check, they can come with interest rates ranging from 300% to 500%.
  • Pawn shop loans are a type of loan where you leave a valuable item with a pawn shop to borrow money. Like payday loans, pawn shop loans usually come with extremely high interest rates. If you pay the loan back as agreed, you’ll get your item back. But if you don’t, the pawn shop can sell it.
  • Title loans put your car’s title on the line as collateral. If you don’t pay the loan back as agreed, you might lose your vehicle.

Borrower beware: Payday, pawn shop, and title loans should be an absolute last resort if you need fast cash, as they can come with astronomically high interest rates and potentially predatory lending practices.

Check Out: Small Personal Loans

Alternatives to emergency loans

If an emergency loan doesn’t seem right for you, here are a few alternatives that you might consider:

  • Credit union loans: Because credit unions are nonprofit organizations, you might be able to get a lower interest on a credit union. However, you’ll need to be a member of the credit union to apply.
  • 0% APR credit card: Some credit cards offer 0% APR introductory periods. If you’re able to repay the balance by the end of this period, you won’t owe any interest. Keep in mind that if you can’t pay off the balance by this time, you might be stuck paying hefty interest charges.
  • Payment plan or hardship options: If you’re facing an emergency or hardship, your creditor might be willing to work out a payment plan. Some creditors also offer hardship options. Reach out to see what your options might be.
  • Ask family or friends for help: Temporarily borrowing money from family or friends could help you navigate a financial challenge. However, this could impact your relationships, so proceed with care.
  • Paycheck advance: If you have a steady job, your employer might be willing to offer a payroll advance in some circumstances.

Build an emergency fund

Having an emergency fund can help you cover unexpected expenses. Generally, an emergency fund should contain even money to cover three to six months’ worth of your expenses.

Having an emergency fund could help you avoid the need for an emergency loan in the future.

How do I start an emergency fund? To get started on your emergency fund, you might save as little as $5 or $10 per week. As you get used to the saving habit, you can add to your savings and watch your account grow.

Another option is to sign up for a high-yield savings account. These accounts offer higher interest rates compared to standard savings accounts, which could help you increase your savings more quickly.

Keep Reading: How Personal Loans Impact Your Credit Score


About Rates and Terms: Rates for personal loans provided by lenders on the Credible platform range between 4.99-35.99% APR with terms from 12 to 84 months. Rates presented include lender discounts for enrolling in autopay and loyalty programs, where applicable. Actual rates may be different from the rates advertised and/or shown and will be based on the lender’s eligibility criteria, which include factors such as credit score, loan amount, loan term, credit usage and history, and vary based on loan purpose. The lowest rates available typically require excellent credit, and for some lenders, may be reserved for specific loan purposes and/or shorter loan terms. The origination fee charged by the lenders on our platform ranges from 0% to 8%. Each lender has their own qualification criteria with respect to their autopay and loyalty discounts (e.g., some lenders require the borrower to elect autopay prior to loan funding in order to qualify for the autopay discount). All rates are determined by the lender and must be agreed upon between the borrower and the borrower’s chosen lender. For a loan of $10,000 with a three year repayment period, an interest rate of 7.99%, a $350 origination fee and an APR of 11.51%, the borrower will receive $9,650 at the time of loan funding and will make 36 monthly payments of $313.32. Assuming all on-time payments, and full performance of all terms and conditions of the loan contract and any discount programs enrolled in included in the APR/interest rate throughout the life of the loan, the borrower will pay a total of $11,279.43. As of March 12, 2019, none of the lenders on our platform require a down payment nor do they charge any prepayment penalties.

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Need Cash for Holiday Gifts? Dan the Deal Man Offers Lease-To-Own with No Credit Needed for Electronics and Christmas Toys

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CAVE CREEK, Ariz., Nov. 30, 2020 /PRNewswire/ — DanTheDealMan.com, a nationwide e-commerce company, offers No Credit Needed lease-to-own with Progressive Leasing and Snap Finance for everything on your holiday shopping list.

Customers can shop for gifts almost anywhere on the Internet and Dan the Deal Man can put it on the lease-to-own program and even give their customers cash back for their initial payment within 24 hours. The gifts get delivered right to their customers’ homes with Free Shipping. Then customers are set up on payments based on their paydays for up to one year.

“Partnering with both Snap Finance and Progressive Leasing has helped our new and past customers to get approved even when most traditional lending institutions have made it more difficult to borrow money during the Covid-19 coronavirus pandemic,” said Dan Marsh, owner of Dan the Tire Man and Dan the Deal Man.

“Many people live paycheck to paycheck and they just don’t have the cash upfront to purchase new items when they need them, especially during the holidays,” said Katie Marsh, co-owner of Dan the Tire Man/Dan the Deal Man. “This program is great for those folks who may have bad credit or are short on cash and need and want things now.”

“With most kids on their iPhones and watching TikTok or scrolling on Instagram all day, we know parents are looking for other gifts to get their kids playing games again or back outside in nature. Our company can help achieve that goal for little to no money out of pocket up front,” said Dan Marsh.

Even this year’s hottest gifts can be put on the program such as Apple Airpods, iPhone 12 Pro, Nintendo Switch, Kindle, Sony Noise Canceling Headphones, Fitbit, STEM kits, Lego StarWars, LeapFrog, gaming computers and much more.

About Dan and Katie:

Dan Marsh has been in all aspects of the tire business for over 35 years. From owning a small tire shop and installing tires himself to exporting large containers of tires out of the US, he garnered the experience needed to create the e-commerce websites that today are danthetireman.com and danthedealman.com. Katie Marsh has a background in SEO and marketing and manages the business day to day. To learn more, please visit danthedealman.com. Or click here to directly apply for the Snap Finance Application or the Progressive Leasing Application.

SOURCE Dan the Deal Man

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Bad Credit

What to Do After Debt Consolidation with Bad Credit

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Life is harder when you have a lot of debt. It’s even more challenging when you have bad credit. These two things together are going to limit how you live your life. Fortunately, there are options for people in this situation.

Here’s what to do after debt consolidation with bad credit.

Stick to Your Budget

You don’t want to let your guard down after consolidating your debt. While you might have gotten much better terms on your loans through the consolidation, it’s not wise to get lax with your second chance. Sticking to your budget is one of the most important things do after consolidating your debt.

One positive about consolidating debt is it simplifies the repayment process. This should make it easier to create and stick to a budget when many of your unsecured lines of credit have been rolled into one.

When it comes to budgeting, here’s what you need:

  • All financial statements, including all accounts and bills
  • Figure out the total income you bring in each month
  • Add up your monthly costs, broken into fixed and variable categories
  • Find the difference between costs and income

Crafting and following a budget is important after debt consolidation because you need to be extra vigilant about paying your bills during this time. Otherwise, you can end up in an even worse place than before you consolidated your debt.

Don’t Fall Back into Old Habits

Studies have shown medical expense is the top reason cited by people filing for bankruptcy. It’s important to acknowledge many financial and debt-related issues aren’t due to personal failings, but systemic oversight. At the same time, people do occasionally make irresponsible decisions.

If you have some not so great spending habits — such as eating out excessively — you’ll want to avoid falling back into them after consolidating your debt. The process of consolidation is a chance to get ahead on your debt. This is only going to happen if you kick the habits that got you into debt in the first place.

Reevaluate Your Debt Situation

No two people’s lives look exactly the same when it comes to debt and finances. It’s possible getting a debt consolidation loan with a bad credit score will be enough for you to regain control of your debt. Then, you pay off a single loan instead of many.

Simplifying the repayment process and lowering the net interest rate can be enough for some people to get out of debt. If you need more help than this, however, debt settlement or bankruptcy might be your next place to look.

Look for Ways to Boost Income

Getting out of debt is about more than just restricting your spending. Your income is another major factor in determining your ability to pay off a consolidation loan. While it might be easier said than done, boosting your income is one of the best ways to reduce or eliminate debt.

Bringing in just a little bit more per month means you can dedicate those funds directly to paying down debt. This will give you greater peace of mind once you can get it under control, and can put you on a much better track financially.

Make Sure You Pay On-Time

It’s always important to pay your bills on time. After all, your payment history accounts for about 35 percent of your FICO score. There are a couple of reasons why paying on-time is essential after getting a consolidated loan for bad credit.

First, you want to start rebuilding your credit. Having a bad credit score makes your life harder in a variety of ways. It’s more difficult to get a loan. And if you do get one, it’s going to come with a high interest rate. You might also be on the hook for fees and other unexpected costs if you don’t pay your consolidated loan on time.

Getting a consolidation loan with bad credit can be a way to have a second chance to rebuild your finances. Make the most of it, and you can finally get out of debt.

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