People with bad credit always have a lesser chance of obtaining a loan; however, there could be a way to walk around it. The lending marketplace provides a ton of opportunities, which makes it possible for those with poor credit scores to borrow money. Have you been searching for a very simple way to get financing even if you have a bad credit? Our guide has a collection of options for you to explore. So, where can you access loan opportunities with bad credit?
Home Equity Loans
This is most likely the easiest and least expensive method of obtaining loans because creditors will be more comfortable to hand out loans when collateral is involved. Home equity loans could also be used to consolidate credit card debts.
A 2016 study showed that average equity for homeowners is $171,972, whereas those who have not completed their mortgage have an average of $98,763. Whichever category you fall under, your equity should be able to cover the negatives of your poor credit.
Joining credit unions isn’t a difficult task. These organizations are non-profit and run by the members. This implies that they can make guidelines to accommodate loaning money to members in need of urgent finances. They are very much consumer-friendly because both the borrowers and depositors are members.
More so, they offer rates and fees that are less expensive than what banks and online lenders offer. Research shows that the people with bad credit get an average interest rate of 28.64%; however, the highest rate a credit union charges, is 18%.
Family And Friends
This might probably sound awkward, but it is one of the best options to explore. You shouldn’t be afraid to ask; the worst outcome will be the rejection of your proposal. A 2017 study showed that 75% of adults either lent or borrowed money from a family member. The study also pointed out that the average amount borrowed is about $5,000.
However, we advise that you always treat this scenario as a business deal. Make sure you understand every detail – the amount, repayment plan and interest – before signing any agreement. Treating this as a business is beneficial to both parties; no one feels cheated.
Local Pawn Shops
Exploring this option is a very simple way to get financing, even if you have bad credit. You have to bear in mind that most pawn shops do not offer long-term loans. Also, they have varying interest rates depending on the laws of the state in which they operate. Interest rates range between 15% to 200%.
On the other hand, no pawn shop will give you a credit loan if you do not have a collateral to offer. Therefore, you have to offer something of value to them. If they like it, they will release the loan to you. The repayment period is mostly between 1-4 months.
It may seem difficult to access a loan with bad credit, but it is not impossible. Familiarize yourself with the guide above, and it will be less difficult for you to obtain an emergency loan.