There are many tips for saving money even when you’re on a tight budget, but what if your savings aren’t enough for a financial emergency?
For example, if you suddenly need to pay a hefty medical bill, borrowing money might be your only choice. However, if you have bad credit, there’s a good chance you won’t be approved for a loan. So what can you do?
The good news is you have options even when your credit’s not so good. That being said, let’s talk about the best way to get a loan with bad credit.
Understanding Your Options: Bad Credit Loans and More
If you do an online search for “poor credit loans” and similar keyphrases, you’ll see a lot of ads from lenders. It doesn’t mean though that they’re all offering similar interest rates and repayment terms.
Do your research so you can pick a bad credit loan that won’t get you in a cycle of bad debt. You can check out bonsaifinance.com to learn more about bad credit loans. Other than bad credit loans, here’s a list of your other loan options.
For homeowners with poor credit, a HELOC or home-equity line of credit loan is a good option. Of course, this only works for homes that have equity in them.
If you get approved though, the interest rates could be lower compared to other loan options for people with bad credit.
2Credit Union Loan
If you’re a credit union member, this loan for people with bad credit should be your first choice. For one thing, you won’t get loan terms and interest rates as favorable as the ones offered by a community-based credit union or one that’s affiliated with your employer.
For another thing, their credit standards are easier to meet, which means you have a higher chance of getting a loan.
Peer-to-peer or P2P loans are online loans, which you could get from individuals or investors. Since they’re not traditional lenders, the interest rates are much lower, but your credit score may still be a factor for approval.
If you can find a family member or friend to cosign a loan for you, it’s another option you can look into. Just make sure you don’t default on payments because doing so will not only affect your credit score.
Your co-signer’s credit will also suffer if you do this because you’re both responsible for repaying the loan (at least on paper).
So What’s the Best Way to Get a Loan with Bad Credit?
Traditionally, the best way is to work on improving your credit so that you get affordable interest rates and workable repayment terms. If you need the money asap, you can choose from any of the 5 we’ve listed here including bad credit loans.
Just remember to shop around so you don’t fall into a debt trap and end up with a much poorer credit than before you started borrowing.
Want More Personal Finance Tips and Advice?
Now that you have some idea on the best way to get a loan with bad credit, don’t stop here. You should try to explore other options such as payday loans, title loans, secured loans, etc.
For more tips on advice on managing your personal finances, you can check out our other posts.