The trouble with being poor is that it makes everything cost more. Getting loans with poor credit is harder and costs more than getting loans with a high credit score. Loans are out there though. Here are seven ways to get a loan with poor credit:
Ask Family and Friends
This may be the cheapest way to go financially, but can cost you in other ways. It’s hard to admit to your family that you need their help, and it’s hard to accept help if it’s offered. You worry about paying your family back too, in a different way than you’d worry about the bank or the pawnshop.
If you borrow from family or friends, put the loan in writing, even if it is small. Pay interest, because that will encourage you to repay and help with any feelings of guilt. Remember that an unpaid loan can wreck a relationship.
Get a Cosigner
One of the most popular ways to get loans with poor credit is to find a cosigner. Some family members or friends who aren’t comfortable loaning money may be all right with cosigning. Their signature will help you get a loan at better terms than you would otherwise receive. It’s a serious step for the co-signer though. If you don’t repay, your bad credit behavior could wreck their credit score.
Business
Depending how much money you need, your employer may be willing to make you a loan. If it’s an emergency, you will do what you must, but in general, it looks bad to an employer to ask for an advance. However, some employers think nothing of making advances, and the interest savings can be enormous. For people with a retirement plan to borrow against, that is one of the best ways to get loans with poor credit.
Pawnshops
A pawnshop stays in business by loaning much less than the value of the goods people take them, and by charging large amounts of interest and fees. Theirs is a high-risk business, making loans with poor credit, so they need a high return. You may pay what amounts to 12 percent a month in some areas.
The advantage of a pawnshop, though, is that you will get money quickly, without having to explain your situation. If you are thinking of borrowing at a pawnshop, consider whether you have something that you could sell instead, on craigslist or eBay or at a yard sale or flea market.
Payday Loan
A payday loan also charges a high rate. However, you do not have to take them any of your belongings. You might pay 15 to 30 percent on the loan, which amounts to an astounding rate if you keep rolling he loan over for a year. You may be asked to write the lender a postdated check, and to bring pay stubs as proof of employment.
It is your choice, but there are more economical ways to get a loan.
Credit Card Advances
Getting an advance on your credit card is not cheap, but it is cheaper than many alternative loans with bad credit. In addition, you can stretch out repayment. Credit cards may charge as much as 30% in some cases, but this can still be cheaper than alternatives, and your credit card may charge less. Just be sure you keep making payments!
Home or Car Loan
Many people who took cash-out refinancing in the past are unhappy now. However, the loans are still available, along with a cash-out refinances of some cars. If you can get such a loan, and not everyone can, go over the numbers carefully before you decide.
Overdraft Protection
Overdraft protection is, in effect, a loan. Like any loan, it costs money and must be repaid. However, overdraft protection is cheaper than many alternatives, and is quick and easy.
In this society, it is extremely easy to get into debt. However, it can be monumentally hard to get out. Though there are many ways to get loans with poor credit, any kind of loan must be repaid. Borrow as little as you can, and repay quickly. The sooner you do, the sooner you can begin to save for the next rainy day.