With the economy at an all-time low, many people live paycheck to paycheck and cannot build up their savings. Then life happens, and you have an emergency. Whether your car breaks down or you have a medical emergency, you need extra money. A personal loan can be of great assistance to help you cover these unplanned expenses.
There are options available if you don’t have a good credit rating but need a personal loan.
Applying for a Personal Loan with Bad Credit
While fewer personal loan options are available to people with a bad credit score, you must research your options and consider the terms before taking out a loan. You can apply for a personal loan in-person with a lender or online.
Suppose you need a 600 dollar loan. You can go directly to the lender and apply for the loan. Each lender may have different requirements. But in most cases, you’ll need proof of identity and a guarantee that you can repay the loan.
If you’d like to apply online, you can submit your application directly to the lender’s website. Alternatively, submit your application to an online lending network. This option is convenient as it allows you to submit one application sent to various lenders. You can then compare the terms each lender offers and choose the one that works best for you.
Type of Personal Loans Available if You Have a Bad Credit Score
It’s unlikely that a bank will give you a loan if you have a bad credit score, but there are other loans available. Some of these include:
- Credit Card Cash Advance
- Payday loan
- Pawn shop loan
If you have a credit card, you can use it to borrow cash. This is easy since you already have the line of credit and don’t need to apply for a new loan. If you use an online banking app, transfer the money from your credit card to your bank account. For cash, go to the bank and request the money or withdraw it by yourself from an ATM.
When you need cash fast, consider a payday loan. The application process is quick and easy, and you can get the money on the same day. To apply for a payday loan, you must be an adult with a bank account, and you must provide your identification document and phone number and prove that you have an income.
This may seem like a fantastic option when you’re in a fix, but you must be aware of the terms. Payday loans carry a high-interest rate and fees, and you have a short time to pay the loan back. Typically, you’ll have to repay the loan with your next paycheck or within two to four weeks. More fees are added if you don’t repay it and you choose to roll the loan over.
A pawn shop loan is an option if you have something valuable to use as collateral. If you have a laptop, electronic equipment, or jewelry, you can take it to the pawn shop, where the dealer will evaluate it and offer you a loan based on 25% – 60% of the item’s resale value.
Like payday loans, pawn shop loans have high-interest rates and usually include additional fees for storage and insurance. You also have a short time frame to repay the loan of thirty to sixty days, and failure to repay gives the pawn dealer a right to sell the item you put down as collateral.
While options are available to people with bad credit scores to secure a loan, it’s essential to be aware of the terms. These loans often come with high-interest rates and can lead to a habit of borrowing to pay off debt.
- Investopedia: Best Personal Loans for Bad Credit
- Bankrate: Best Bad Credit Loans in June 2022
- Nerdwallet: How to Get a Personal Loan with Bad Credit
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