loans
Credit Unions vs. Banks
Despite the fact that both of these types of traditional banking institutions virtually perform the same services for millions of Americans, credit unions and banks actually have very unique and different business and lending models.
One of the biggest differences is that credit unions operate as a non-profit and are governed by their members elected leader. Most credit unions were established to serve a unique group of people, people that belonged to a certain employer, government employees, and/or other requirements. Now a days it is easy to become a member at your local credit union. And the benefits are quickly out weighing the benefits of banks. Credit unions often can offer lower interest rates and higher approval rates on loans to members. They often also have the same benefits like, free checking, convenient ATM access, and online banking. It is no wonder people are switching to credit unions all over the nation however, credit unions may be operating “out of accordance” with the reason they were set-up.
Traditional banks and credit unions have always had their differences. One of the main arguing point that banks often complain about is the fact that credit unions are not required by law, like they are, to spend a portion of their earning on community reinvestment. Banks spend millions of dollars a year reinvesting in the communities they serve and credit unions are exempt to this law. Also, banks are sick of credit unions operating as a non-profit. They often take in earnings much higher than small community banks and feel it is outrageous to claim they are “not-for-profit” and feel they should be paying higher business taxes and insurance coverage like banks are forced to.
Either way if you have bad credit, you most likely will not be approved to bank at either of these institutions, unless they implement a second chance bank account
Cash Loans for Bad Credit
Bad Credit seems to be an ever growing problem in the United States. Unfortunately, with the fragile economy credit scores will continue to drop as job loss continues and restrictions on lending to subprime customers has tightened and is virtually non existent. So what happens when you need a loan for emergencies? Unfortunately if you have bad credit it will be hard to get any loan but you may have luck with a small dollar short-term loan like a payday loan.
Cash loans for bad credit, is also referred to as a personal loan. Personal loans can be funded by a variety of different lenders but if you have bad credit, you will probably only be approved for cash loan by a subprime lender, like a payday lender.
When applying for a cash loan with bad credit, you will need a couple of pieces of information. First you will need a social security number (therefore you have to be a U.S. Citizen AND over the age of 18) You will also need to currently be employed and making over $750 a month. If you are applying online you will also need to provide your routing and bank account information as these lenders will be directly withdrawling the loan plus interest on your next payday.
Only use payday loans for emergencies and always pay them back on time, otherwise you could end up paying a lot in interest!
Military Payday Loans
If you are not familiar with payday loan laws, you may not know that the cap on lending to military personnel is limited to 36% APR, that means that no one can loan to anybody in the active military, reserves, is the spouse or the dependent, if the loan interest is higher than 36% APR. That means that loan can never gain more interest for its annual duration above 36%.
Since payday loan lenders make money based on the high-interest rate on short-term loans, this is not a profitable group to extend loans to for the most part. While 36% APR may seem like a lot, you have to understand that about 60% of people who take payday loans don’t pay them back. This is the MAIN reason why payday lenders charge so much in interest for their payday loans.
For example if you took out a $500 payday loan, on average you would be paying $125 interest on that loan in two weeks, so you would pay back $625. Now this is just below the mark for the APR as this is a 25% interest rate but you need to understand it is a 25% interest rate for TWO-WEEK loan, what happened if they can’t pay the loan back on time? The lender can only charge $55 in late payments, fees or interest before they hit the max 36% APR cap for the YEAR. This is not enough revenue to create a profitable business therefore due to the cap on military lending or military payday loans, most payday loan lenders no longer lend to military or their families.