Having bad credit can be a bid impediment to borrowing money when you need to. The simple fact is that without good credit, your borrowing power is greatly diminished. That doesn’t mean there’s nothing you can do, though. Here are some useful ideas when you find yourself in a situation where a little extra cash is essential, and your credit isn’t good enough for a traditional bank loan.
Loans from Friends and Family Members
You may have friends or family members who can help you with a short-term personal loan. Many of the options available to you will have a high interest rate, and the terms may not be very flexible. Taking a private loan from someone you know may have the advantages of lower (or no) interest and more flexible terms than might otherwise be available to you, so it’s certainly one of the more desirable options for borrowing money when you have bad credit.
Find a Co-Signer
If your borrowing needs are larger than a personal loan from a friend or family member can satisfy, you may be able to have someone co-sign a bank loan for you. This means that they’re personally guaranteeing that your loan payments will be made; if you have a co-signed loan and fail to make your payments, your co-signer will have to make the payments or their credit will suffer.
Borrow from a Credit Union
Because of the way credit unions are structured, they may be able to offer you a loan, even when traditional banks won’t. Credit unions tend to have a more responsive approach to customer service and may have lower fees on loans, as well. Credit unions work a little differently than banks, but they still have standards to meet when making loans. If you have bad credit, your credit union may have different terms for various types of loans than what you might expect to encounter at a bank.
Peer-to-Peer Network Loans
Peer-to-peer loans are relatively new, with companies emerging just in the past decade that allow borrowers to be able to form direct connections with loan providers. This is a good situation for both the lender and you, as you’ll be able to borrow with favorable rates, while also offering a better return for the lender than they might earn by keeping their money in a bank account.
When you take out a secured loan, it means that you’re providing the lender with something of value in order to provide assurance that you’ll make your payments. Secured loans may include taking out what is known as a car title loan, where your car title is signed over to the loan company to secure the loan. Unlike other forms of secured loans, car title loans may carry exorbitant interest rates. You should be very careful when entering into short-term options like a car title loan and lean more toward traditional secured loans.
Meeting the Need
Just because you have bad credit does not mean that you can’t get the money you need in emergency situations, or to cover unexpected expenses. You simply have to be willing to look into options other than those provided by traditional banks. Positive group’s bad credit loans are geared towards lending money to people who were affected by credit issues in the past, and many similar options are out there if you look around online. Borrowing money when you have bad credit isn’t as easy as getting more traditional loans, but it’s not impossible.
Jon @ Penny Thots says
If you have credit cards, you could also get cash from them as well. Granted the rates will be high, but it is still an option if you would rather not ask friends or family. For me, depending on how much money I needed, I would take this route first and then looking in peer-to-peer lending.
Jayson @ Monster Piggy Bank says
I have never had a bad credit. But, I think the one that I see potentials is the borrow from a Credit Union. I think it has lesser risk.
Veronica Marks says
I really appreciate this article because my husband and I have awful credit right now. However, our car is about to die and we absolutely have to have at least one vehicle. We have thought of getting a loan to get a dependable replacement, but we were worried about not qualifying. These are some great ideas for still being able to get something to meet our needs, especially the idea to find a co-signer. Thanks!
Chip Waple says
Good informative post. Do you research first….too many scam artists willing to take your money.