Loans are looked upon as bad financial moves. However, there are times you’ll need them for personal, business, or family uses that can prove to be beneficial. In recent times, if you have good credit, you are never broke. Unfortunately, not everyone has those high credit scores lenders now want to see. If you have bad credit, there are a few alternative methods to get loans.
Use the Equity in Your Home
If you own a home and have equity take out a low-interest loan against that. Now, your available amount may be much more than you want, so try to take out just what you do need. If not possible, put the additional money into an interest-bearing account and make payments as necessary. Be sure to check for any early payoff fees that may be applicable.
Most people have gotten wise to not borrow money from family and friends directly. However, peer-to-peer loans are increasingly popular these days. Peer-to-peer loans are still through individuals; however, it’s monitored via a company (usually online) to bring lenders and borrowers together. The credit requirements are much less demanding than a typical bank or credit union and the interest rates are reasonable as well.
Take a Loan Against Your Financial Asset
Chances are you have a financial asset, such as a money market account, life insurance policy, company sponsored 401k, or IRA with a bank. If so, you may be able to take a loan out against it. This will dip into your future retirement plans, but it’s an option that typically pays back interest to yourself. Just be aware of the potential tax consequences should you not pay this loan back.
Bad Credit Lenders
A final resort is to find a bad credit lender. These loans are typically available online and have few requirements. They will validate your proof of employment via your paycheck stub. The funding will be deposited into your verified checking account and payments will automatically be withdrawn from there. Most lenders can provide bad credit loans and some can even fund smaller loans the next business day.
Ask a Friend to Co-Sign
If all else fails, ask someone you trust to co-sign for you on the loan. This could be to co-sign on a loan directly or a credit card where they can monitor you as well. Don’t just walk up to them and ask them for this assistance. Come prepared as though this is a business deal – because in all honesty when dealing with money, it is business. Come with a written statement of:
- what the loan is for
- how you plan to pay it back
- show them your budget plan
- give an expected date to have the debt paid in full
You can guarantee they will respect your position more than coming to them empty handed.
Getting a Loan with Bad Credit Conclusion
So, there you have five methods of getting a loan with bad credit. Whatever method you do decide on, be sure to take just enough needed so you don’t get over your head in debt.