Being under the category of 'bad credits' reflects on your failure of bad debts or missed repayments in the past. Bad credits might make it difficult for you to get loans from banking firms afterward but it won’t completely shut off all your options.
Here’s a guide on how you can borrow loans even when you have bad credits.
#1. Use A Home Equity Line Of Credit
If you need a loan but are dealing with bad credit and low income, opt for a home equity line of credit. Sufficient equity in your property can get you a low-interest and tax-deductible line of credit to spend whichever way you prefer. The success of this inexpensive method is possible only if you have a stable income and are meticulous enough to regularly clearing off the loan amount.
WARNING: Make sure your source of income is reliable because a home equity puts your property in a risky position.
#2. Apply To Credit Unions
Credit unions are just like banks and are owned by their members. These members are usually from the same industry or similar geographical boundaries. They are non-profit organizations who transfer the earnings in the form of lower fees and higher customer services, exclusively to their members. While selecting a credit union, make sure you pick the one which offers the highest interest and lowest fees. So, if you are looking for loans with bad credits, then this method will suit your demands.
WARNING: because credit unions are usually small in size, they are unable to fund for expensive technology upgrades.
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#3. Get A Peer To Peer Loan
If you are looking for loans with bad credit and no job, then you only trust your peers. No banks or credit unions would trust your skills enough to provide you with a loan after they see “Unemployed” in your Profession Column. Peer to peer is an online portal allowing any individual to borrow from another person instead of some institution directly. It’s a win-win situation for both parties as it provides low-interest rates to the borrower and high-interest rate to the investor.
WARNING: if your credits are bad, then you might get stuck with high-interest rates. This will cost you more in the long run.
#4. Appeal To A Co-Signer
If you need loans with bad credits and no credit check, then appeal to a co-signer. If you haven’t been able to pursue any banks or unions to trust you with a loan, then better get a co-signer. The co-signer could be anyone who trusts your abilities and empathizes with your current situation. If they are willing to take a chance for you, make sure you keep up to their expectations because in-case of bad-debts, the cosigner will have to pay the full amount to the creditor.
WARNING: Inability to pay back the debt might ruin your relationship with your co-signer.
(Image Courtesy: Startup Hyderabad)
#5. Take A Loan From Family Or Friends
If nothing works, you can always trust your family. If you need loans with bad credit and no bank account, it is futile to consider any formal institution. Just run to your father or any other family member and ask them for a loan. To keep things clear, get everything on paper. A written document with the interest rate, payment terms, collateral if any, and repercussions in case of non-payment should be drafted. Sites like Rocket Lawyer or LegalZoom can help you get the promissory notes. A family loan too has double-sided benefits.
WARNING: A family loan should be your last resort if you do not intend on risking your relationships over a bad debt.
Can you think of any more options to consider while borrowing loans with bad credits? Let us know in the comment section below.
(Featured Image Courtesy: Carmencitta Magazine)