Understanding how credit works and how to build it is vital in today’s world, but improving your credit takes time, and if you need cash fast, that’s something you can’t afford. The good news is, you may actually have more options available to you than you realize, even if your credit is bad. Here are 6 ways to find a loan without getting stuck paying high sub-prime interest rates.
Peer to Peer (or P2P) lending has revolutionized the industry by allowing you to use an online platform to borrow from an individual instead of from an institution. The streamlined process brings investors and borrowers together and makes comparing offers a breeze.
Get started and post your listing, with the amount you are seeking and why you need it, so potential investors can review it and decide whether or not to lend to you. Your credit score may still be a factor when it comes to P2P lending, but an individual investor may be more understanding of your situation than a bank that has shareholders to answer to.
Taking a loan from family or friends is a good alternative if peer to peer lending isn’t for you. Family won’t ask you what your credit score is if they know you’re good for it. You can even obtain a promissory note through sites like LegalZoom and RocketLawyer. Remember to put your agreement in writing, complete with the payment terms and what happens if you fail to uphold your end of the bargain, and make sure the terms work for everyone. The last thing you want is to let money come between you and a friend or loved one.
If you know a credit all-star who’s confident in your ability to repay, asking them to co-sign your loan can be a great option to rehabilitate your credit. You can begin rebuilding your credit with every payment. Before finalizing anything, however, keep in mind that late payments or defaulting on your loan will affect both your credit scores, and your creditor will look to your co-signer for full payment if you can’t make your payments.
Unlike traditional banks, credit unions are member-owned and operated, and pass their earnings along to members in the form of loans and other financial services at better rates and lower fees. Visit MyCreditUnion.gov to find credit unions near you. Just like when shopping around for a bank loan, be sure to check out offers from multiple credit unions to get the lowest rate possible before signing on the dotted line.
If you need money fast, but your credit is less than perfect, a title loan could offer fast relief during an unexpected financial emergency. If you own your car outright, a title loan could help you access the equity of your vehicle, whether you have good credit, bad credit, or no credit. You also keep and drive your vehicle while repaying, so life continues as usual. Find out more about how a title loan could help you today.
You can also use the value of your home to get a home equity loan or a home equity line of credit.
A home equity loan can be good source of money for one-time expenses or major purchases. Tapping all your home’s equity at once can really work against you if your property values decline, but it’s a lump sum with a fixed rate so your payments stay the same, and the interest is usually tax deductible.
Home equity lines of credit give you the flexibility to borrow as you need, like a credit card, so the interest is based on the amount you borrow, and is usually tax deductible as well. The rate is usually adjustable, so your payments may rise or fall depending on changes in the prime lending rate.
Each of these 6 options has its merits and its drawbacks – it’s really up to you to take an honest look at your means and needs to determine which option is best for you and your situation. Don’t let bad credit keep you from getting the money you need. There are alternatives to the traditional bank loan, so have a look around to see which strategy works best for you.