Even with bad credit, you do have options when you need funds for an emergency or major expense. Although most of the interest rates and fees will be higher due to your credit status, you can still obtain a loan. It is also a way for you to become responsible for making payments so that you can begin rebuilding your credit. Some alternative loan agencies do report to credit bureaus.
Online Personal Loan
When seeking out an online personal loan, it is important to make sure that the lender is legally able to lend to you in your state. Some states do prohibit the use of online lending options. You will be required to either fax or email documents in for verification purposes. In most cases, you will receive an answer within 48 hours and have the funds within 24 hours from approval. Many online lenders specialize in bad credit loans for people that need them.
Private Party Loan
Borrowing from a private party can be risky as it can ruin friendships and family relationships. The benefit here is that you are creating terms with someone that is likely to allow some leniency. There is additional stress to experience when owing someone you know a considerable amount of money. It is best to put the agreement in writing and have the documents notarized. Only ask to borrow what you can honestly payback on the terms agreed upon. If you fear missing a payment, attempt to negotiate different terms for repayment.
Auto Title Loan
Auto title loans are ideal for those that are done paying on their vehicles and have possession of a clear title. The limit that you can borrow is dependent upon the value of your vehicle. Some vehicles may only be worth a few hundred dollars while others can be worth tens of thousands of dollars. The benefits of auto title loans are that you can repay the loan over time, rather than one payment and it is a more manageable payment.
The disadvantage is defaulting on your loan without contacting the lender. If you miss a payment, your vehicle can legally be repossessed by the lender. The lender can choose to hold the vehicle to make additional arrangements, sell it or send it to auction to attempt to recover the financial loss. The lender can also take you to court.
Bartering Services
Consider offering a service as repayment for a personal loan. This would be an arrangement where you are essentially paid in advance to perform a job. The job should be worth an equal amount to the money borrowed. Make sure to complete this arrangement and put it in writing, as either party not holding up their end of the deal may result in a lawsuit in small claims court.
Payday Loan
Payday lenders do not run credit checks. The determination is based upon your valid checking account status, employment status, and ability to repay the loan based upon your income. The amount that you can borrow depends on your level of income. Missing a payment may result in your bank account being overdrawn as they will do whatever it takes for them to get their money. Payday loans are most commonly paid back in one payment on your next pay date to avoid the high daily interest charges.
Final Thoughts
Although you will be subjected to additional fees and higher interest rates, in an emergency situation, you will make adjustments to your lifestyle to repay loans. It is a good idea to cut frivolous spending and perhaps sell off a few unused items to help make loan payments. High-risk lenders do often prosecute those that default on their loans, close bank accounts or put your bank account in default. Always stay in contact with the lender should an issue regarding repayment arise.
