Many believe that having bad credit automatically means you cannot borrow money at all. But how can you get out of your dire financial situation if no one will lend you money? Luckily, there are ways to still get a loan even if you have bad credit. Not all lenders shut their doors to people who made the wrong financial decisions.
Whether you need money to make repairs to your home, get a new vehicle or start up a new business, there are opportunities for you to get the money even with a bad credit rating. Here’s how.
- Borrow from family or friends. Only borrow from a relative or friend if you have the ability to pay them later on. Borrowing money from people you know, especially people close to you can be tricky. However, if you are at the end of your rope, it may be your only options. Agree on the terms of the loans and stick to it. If you won’t be able to pay on the specified date, make sure to inform your relative or friend. Never borrow from acquaintances or people you only bump into once in a blue moon. It just doesn’t look good.
- Borrow from your employer. Some companies offer their employees a low interest loan that can be paid through salary deduction. This type of human resource program is usually meant to help out employees who are experiencing a temporary financial challenge. Some employees in certain companies have their own loan cooperative where funds can be borrowed from. To protect the cooperative, payments for the loan are deducted automatically from the salary of the employee.
- Borrow through someone else. Some close friends or family may agree to loan for you or at least co-sign your loan. Make sure not to default on the loan otherwise your family or friend will end up paying for the loan which is not fair at all. This may even mean the end to your once healthy relationship.
- Borrow through credit cards. Even with bad credit, there are credit card companies that are still willing to give out loans. Why? Because this gives them an opportunity to charge higher interest rates. Loaning from credit cards is an option but be aware that the rate of interest is often steep.
- Borrow via an unsecured personal loan. This type of loan, also known as a signature loan, does not require any collateral. It is a kind of loan geared for personal use and will depend on the borrower’s integrity and his ability to repay the loan given the terms. Financial institutions offering unsecured personal loans take a big risk because no asset is involved to secure the loan. Unsecured personal loans often come with high interest rates pretty much like credit card loans. Make sure you can pay your monthly dues on time.
- Borrow from pawnshops. You can find pawnshops online and in your area that lend money to people with bad credit. Present your collateral (jewelry, electronic equipment, etc) and have it appraised. The amount you can loan will depend on the appraised value of your collateral. To redeem your collateral, pay back the principal and the interest accrued.
The key to making a loan is to only borrow an amount that you can pay back. Otherwise, getting a loan, especially when you have a bad credit rating, can only bring you further down the financial ladder. Loans for individuals with bad credit are available. You just need to know where to find them, how to secure them and how to pay them off in time.