Understanding Last Resort Loans and Who Needs Them
If you’ve been in a situation that calls for an urgent borrowing of money through a short term personal loan without the need to explain or prove what you need the money for, but have been rejected other loans, chances are that a last resort loan is what you might end up looking for.
Last resort loans are loans provided by select non-bank direct lenders to individuals who have faced any number of rejections in loan applications either recently or in the past. These are typically loans that do not bar the borrower on the basis of credit score and previous rejections. Since the borrower may have very limited options left and also since there is evident risk in lending money to the borrower, these loans come with a higher price tag of repayment i.e. they are high fee and high interest loans, intended only to be used in emergencies when other options are not feasible.
Online Last Resort Loans
Last resort loans as mentioned earlier, are products designed to serve in emergencies. Borrowers of these loans are likely to be preoccupied with other burdens. The market hence has evolved to provide such loans via completely online processes. The most popular and helpful last resort loans are the ones that are available online from direct lenders whose services don’t just offer fully online process of application, approval and transactions but also can be vetted for authenticity, online.
An example here is EzPaydayCash – a reputable online direct lender offering 2nd chance and last chance payday loans.
Second Chance Loans vs. Last Resort Loans
Second chance loans are quite the same as last chance or last resort loans in that they work with a similar logic or process and that most lenders would also use these terms interchangeably. In the few cases where lenders use them distinctly, it is probably understandable to most readers that second chance loans may be a little more affordable while last chance or last resort loans may involve a little less scrutiny and filtering.
In the example given in the previous section, the lender EzPaydayCash does not distinguish the 2nd chance and the last chance loan.
No Credit Check vs. Soft Credit Check
Credit check is almost considered a given for all loans in the US market. Some loan lenders offering very short term loans however, can choose to either skip the credit check process or conduct just a soft credit check which reveals limited credit related information and does not feature on and/or impact your credit history.
Some loan lenders may define when a soft credit check is done while some may not share this information and use soft credit check on an ad hoc basis.
In either case, last resort loans are typically designed to serve people with bad credit scores and a soft credit check or no credit check hold limited relevance with regards to approval or rejection of these loans. That said, a lower credit score holder may be offer a more expensive deal by some lenders at times.
It is important for loan borrowers to understand that last chance loan lenders which shall skip the credit verification process, are likely to verify the income and it’s stability for assessing the borrower’s ability to repay, in order to ensure that the transaction is safe to an extent.
What if you have Very Bad Credit History
If a borrower has a very bad credit history, it is likely that a last resort loan is the only option available. Borrowers with credit scores of 400 and below may not find it easy to get loans, but the last resort loans are designed to cater to borrowers irrespective of credit scores and past performances.
Almost all legitimate last resort loans are very short term loans and the income of an individual – by most lenders – is considered a better indicator of repayment ability in the short term versus the individual’s credit history.
Using Last Resort Loans in Emergencies
Last resort loans are high interest loans and they are intended only for emergency use. These loans are not intended to be used on a regular basis and such a practice can be very damaging for an individual’s finances.
Surveys reveal that borrowers tend to use the loans for emergencies like:
- Sudden medical expenses not covered by insurance policies and national health coverage
- Vehicle repairs
- Home repairs that cannot be postponed
- Travel expenses that cannot be avoided
- Unavoidable due dates
Such emergencies may require not just a reliable source of borrowing money but also one that is fast. While choosing a last resort loan in an emergency that requires the money to be available quickly, a few points could be of help:
- Ensure the lender is trustworthy
- Prefer trustworthy direct lenders over loan brokers
- Online direct lending tends to provide quicker application, approval and transaction processes
- Only borrow the amount of money you really need
- Borrow from a lender whose transaction time fits the time frame of our requirements comfortably
- Read and understand all terms of your agreement with the lender and contact the lender where you need clarity before agreeing to any term
- Stick to the repayment timeline because failing to do so may be very expensive and also further detrimental to your credit score
- Choose less expensive loans if feasible
Are these Payday Loans?
Last resort loans are a form of short term personal loans from non-bank direct lenders. Most such loans are in fact payday loans or their derivatives. Some direct lenders may be able to offer installment loans as last chance or last resort loans as well, but that may be unavailable in some states. These loans are regulated by the state and federal laws under the regulations set for payday loans.
Direct Lender Bad Credit Loans can feature Guaranteed Approvals
Most borrowers who look for a last chance credit loan are willing to bare the high cost of such a loan, provided that that cost means reassurance that they shall get their loan. It is hence a fair expectation that such loans must have a guaranteed approval.
Some direct lenders like EzPaydayCash make a legitimate claim of offering such payday loans with guaranteed approvals, despite the bad credit history that most borrowers of these loans may have. The way this works, is that the lender places a clear stipulation of eligibility criteria. Provided the borrower is ascertained to be eligible for a loan of a particular amount as per that criteria, a loan of that amount is assured to the borrower subject to agreement of the terms and conditions of the loan offer.
This makes practical sense because a loan that stands to be a last resort, cannot exactly function like one if it is not really reliable enough.
Applying for Direct Lender Last Resort Loans
The process of application for direct lender last resort loans is usually designed to be simple for two reasons:
- The borrower is less likely to have much time during emergencies to fill up multiple lengthy forms and submit loans of documentation
- There is not too much to verify in a last resort loan – credit check is usually skipped and both the lender and borrower typically understand that it is a high risk, high expense loan of a limited amount of money for a short period of time
These fact enable the process to be short and easy. The easiest and most used option is the online last resort loan application. Most lenders shall require information that can be provided in just a few minutes via an application form. At EzPaydayCash, this link to the 2nd chance direct lender payday loan takes you to the loan page and from there, the short and simple online application form can be accessed.
