Welp MagazineThe most significant factor that affects your ability to borrow money is your credit score. Millions of people have to go through hard times just because they do not have stellar credit standings. Sometimes taking a loan is the only option to come out of debt.
But, can you borrow with a bad credit history? No, then what to do?
Take a bad credit loan. Bad credit loans are convenient for people with poor credit because they are more lenient with the approval and requirement.
However, the biggest setback of bad credit loans is that they tend to have a higher interest. It works like a traditional loan, but they have a very limited borrowing limit and their interest rates are higher than usual. Worry not; there are several options that you can try if you can’t handle a bad credit loan or can’t get one in the first place.
These loans tend to have lower interest rates and a more lenient approval process than regular personal loans. However, these options are more situational and can be a bad choice if handled poorly. Here are some of them:
Online Loans
Due to the advancement in our technology, the new generation of lenders nowadays is more focused on giving people loan products over the internet for ease of access. Online lenders can tell you almost instantly if you’re approved or not, and you also get your money as fast as a few hours or days.
Online lenders even tend to give lower interest rates and smaller service fees because they don’t have the overhead costs of having a physical branch. What’s best about them is that you can have a better chance of getting approved for a loan when it comes to online lending with a good credit score.
However, don’t worry if you have a poor one because they have alternate options on determining if you are creditworthy, like your utility payments, debt-to-income ratio, and even data from your social networks.
Also, most online loans are unsecured, so you don’t need to put collateral to get one. Not to mention that you can get them anywhere. So, whether you want to get California vacation loans or Arkansas Personal Loans by CreditNinja, as long as you have a device, internet connection, and the documents handy, you can get them with no trouble.
Credit Union Loans
Generally, a loan from a credit union has lower interest rates and better repayment terms than your traditional personal loan.
Credit unions offer similar products and services as banks, like loan products, ATM access, physical cards, etc. However, the difference between them is the way they work.
Banks are businesses, and they give out their loan products and services in exchange for profit. On the other hand, a credit union is an organization that’s created by its members and for the members. They give out their savings to their members in the form of lower interest rates loans, higher interest rates on their savings account, loan discounts, etc.
Perhaps the only challenge about credit unions is that you need to be a member first. To be qualified to be a member, there are some prerequisites like being in the same homeowners association, school PTA, going to the same church, etc. Also, you being a member is not enough. You may be required to be a member for some time and have deposited a specific amount of money before you can enjoy the benefits of being in a credit union.
Cash Advance
If you have a credit card and still have some available credit, you can opt for that instead of getting a traditional personal loan. A cash advance allows you to get a short-term loan from your credit card issuer. Of course, it still needs to be paid like the other things you put on your credit card, and you can also have a different balance to pay it back separately.
It’s very accessible too, and lenders easily approve it. If your card has a PIN, you can just go to your nearby ATM and withdraw your cash advance. If not, you can go to the nearby bank and get your cash advance there. However, be mindful that most credit card issuers don’t allow their clients to borrow the entire credit line.
Most of them have a limit of a few hundred dollars. The best thing about them is that they have little to no cash advance requirements. It’s because since you already have a card with them, they’re more lenient in approving you for a cash advance.
Final Words
Bad credit loans are convenient if you have bad credit, but they aren’t necessarily the best option for every situation. That said, if you’re looking for better alternatives, try the ones mentioned above. But again, take note that these options are more situational, so you should pick an option that is better suited for your financial situation.
