Loan Options for Bad Credit
Anyone can experience the frustration of having less than perfect credit. One missed payment, spending too much on a credit card, or facing financial circumstances out of the blue that eat away your savings all have the potential to damage your credit.
Once bad credit hits, lenders and other creditors see you as a high-risk borrower, which means you may not be able to easily get a loan or credit card from a conventional lender when it’s needed most. Don’t worry, though! There are several loan options for bad credit when you know where to look.
Help from Friends or Family
When you’re in a financial bind and need to borrow money in a hurry, running to friends or family with your hand out may not be all that comfortable. Whether a parent, sibling, cousin or best friend from college, no one wants to ask for help with money outright.
One smart way to avoid the discomfort of asking for financial help is to ask for a close friend or family member to co-sign a loan instead. Traditional lenders are more apt to approve loans for bad credit when an additional borrower is listed on the application.
Before taking this route as one of your poor credit loan options, talk with your co-signer to ensure they understand the risk. If you default on payment, the lender is likely to start contacting the other person to pay any outstanding balance due on the loan. Make sure you are able to manage any payments on your own, and have a backup plan if you find yourself unable to pay on time or in full.
Car Title Loans
If you’re wondering how to borrow with bad credit, without having to get a co-signer, a car title loan may be a strong option. Car title loans offer quick access to cash when you don’t have many other loan options for bad credit, based on the equity you have in your vehicle.
The car title lender uses your car, truck, or SUV as collateral for a loan ranging from $2,000 up to $50,000 with repayment spread out over a year or more. You do not have to worry about your credit history when working with a car title lender, and typically a co-signer is not required. As long as you own your vehicle and have the title, a car title loan is one of the simplest loan options for bad credit.
Check with your Credit Union
In some cases, a regional or local credit union may offer loan options for bad credit, but the repayment terms and interest rates provided may prove to be cost prohibitive. Credit unions are more apt to listen to your story than a traditional big bank, and they may be sympathetic to smaller credit blunders, like a missed payment or a small account in collections. Before trying a credit union for poor credit loan options, be prepared to show proof of steady income and that you’ve recently put in the effort to improve your credit.
You aren’t out of luck if you have bad credit and need an affordable loan for a major purchase or to cover a financial emergency. Loan options for bad credit are available if you’re able to secure a co-signer, work with a reputable car title lender, or speak openly and honestly with your credit union. Before taking out a new loan, take the time to review your budget and know what you can realistically afford for repayment.