Securing a loan is not an easy feat, especially if you have bad credit. Banks, financial institutions, and other traditional loan providers look at a person’s credit standing to figure out if a potential borrower is eligible for financing, and how much interest rate to apply to the loan. If you want to get the best loan at the most competitive rate, you have to work hard to maintain a high credit rating before securing a mortgage or credit plan.
Since bringing credit ratings up may take some time, what could you do if you desperately need a loan while struggling with a poor credit rating? Don’t worry. Below are five loan options for individuals who have bad credit.
- Direct Payday Loan
If you need cash quickly, you should consider taking out direct payday loans. Just ensure you’re getting it from reputable companies like 67 Cash Today. Compared to traditional lenders, online direct payday lenders approve financing applications fast and fuss-free.
Typically, they don’t look at credit ratings and are more accommodating and flexible. They are a reasonable consideration if you’re in a tight pinch and need money for emergencies, or to pay for medical bills and other family needs.
- Title Loan
Another type of debt you may want to consider is a title loan. It’s ideal if you need a sizeable loan amount and you have collateral to back up the financing plan. Some of the collateral you could use for this type of debt are automobiles, machinery, insurance policies, investments, real estate, jewelry, and other valuables.
One of the best benefits of getting this type of credit is fast approval. In just a matter of hours, you can have the loan amount deposited in your bank account after submitting your application.
However, this is a short-term loan with high interest. It’s advisable to tap this loan facility only if you’re expecting money in the coming months to cover the amount you borrowed plus interest. If you fail to settle your account on time, you may lose your car, house, or whatever collateral you used to back your debt.
- Second Chance Loan
A second chance loan is another debt facility ideal for people with fair to poor credit ratings. If a credit union or bank declines your loan application, you may have a second chance to secure financing through this last chance type of loan.
Often, bad credit debt is available as an installment type financing, so it might be easier to pay. But like other types of high-risk loans, the interest applied to such financing deals is higher than traditional loans because of the higher credit risk the lender carries.
The financing schedule of second chance loans is flexible, depending on the amount of your debt. It can be long-term if your loan amount is significant, much like subprime mortgages. But it can also be a short-term installment loan if the money you are borrowing is just a few hundred dollars or within an amount range you can get from the likes of personal or payday loans.
- Cash Advance
If you still have some balance left on your credit card, you could secure money through its cash advance facility. You don’t have to think about bad credit and long waiting times because getting cash advances is usually instantaneous. You can get your money through an ATM (automated teller machine) or online, with just a few clicks of the mouse. Again, credit card cash advance is fast and easy, but the more you draw from your card’s balance, the more your credit rating may be negatively affected.
- Friends And Family
If you’re really in a financial pickle, it may be a good idea to seek help from family and friends. Often, close friends or family members are willing to lend you money with little or no interest, primarily if you use the money for emergencies, medical bills, or investments. Also, they may be flexible regarding repayment terms, and wait for you to get back on your feet before asking you to pay the money you owe.
However, not everyone has friends and family who have extra money available immediately. For instance, during pandemics where many people lose jobs, businesses close, and folks experience financial woes of their own, it may be hard to find someone who isn’t suffering from financial constraints. Also, when you borrow from your BFF (‘best friends forever’), your sibling, or your parents, you might feel awkward attending parties or gatherings while you still haven’t settled your debt.
Conclusion
Even people with bad credit ratings sometimes need money to pay for emergencies or keep their business afloat. Luckily, there are still many loan options available to them despite their bad credit score. All they must do is to find one that can cater to their credit standing and financial needs.
