Many people use loans for emergencies and other unexpected expenses. Loans can help borrowers pay those off while offering predictable payments they can slide into their budgets. Fortunately, even borrowers with poor credit have several loan options to help them escape those financial troubles. This article will explain so that poor-credit borrowers can get themselves out of a financial bind.
1. Get a loan designed for poor-credit borrowers
Many lenders offer loans designed for borrowers with poor credit. Many come with less strict credit score requirements, and lenders will consider additional factors like your income and employment history when deciding whether to approve you.
For example, cash advances are small-dollar loans that can give poor-credit borrowers a few hundred dollars to cover expenses before their next payday. With these loans, you can typically receive a few hundred dollars to cover expenses. Then, you’ll repay the loan in two to four weeks, when you get your paycheck.
Installment loans are another option for borrowers that need cash fast. These loans can give you a lump sum of money all at once that you can repay in fixed monthly payments, or installments.
2. Use a co-signer to get a loan
A co-signer is someone who signs onto a loan with you, promising to repay the debt obligation if you end up missing payments or defaulting. Many borrowers look to close friends, family members, and other people they trust to co-sign their loans. That said, you must make sure your co-signer has a great credit score and history. If not, approval may still be a bit challenging.
3. Look to secured loans and credit cards
Secured loans require you to put down collateral, such as your car, a piece of jewelry, or a savings account, to get the loan. The lender can take this collateral if you default on your payments, reducing risk. As a result, lenders have more lenient criteria for secured loans. This can make it easier for poor-credit borrowers to get the funding they need.
Secured credit cards are similar. They require you to put down a cash deposit as collateral for the card. The amount of cash you put down becomes your credit limit. You can then borrow up to that credit limit and repay at your leisure. For example, if you put down $500 for a secured credit card, you can charge up to $500 on the card.
The bottom line
Poor-credit borrowers have several options for escaping tough financial situations. One of the main methods is to seek out a loan designed for poor-credit borrowers, such as cash advances and installment loans. Getting a co-signer can help as well if they have a solid credit score. That said, borrowers can also consider secured loans if they have collateral they are willing to put down. Regardless of the route you take, shop with multiple lenders to see who offers great rates so you can fit your loan into your budget.