The economic downturn has hit many people hard, with jobs lost, income reduced and debts left unpaid. The tragedy is that getting access to extra funds quickly through loans has become essential to meet debts, but due to bad credit, personal loans are more difficult to get approval for.
It all points towards a downward spiral of debt and financial hardship. However, there is a solution to the problem, with loans for people with bad credit available to those who know where to get them. The fact is that, with traditional lenders applying stricter criteria to shore up their losses, alternative lenders must be found.
Here are three ways in which a person can secure personal loans, despite bad credit. So, if as much as $5,000 is needed to clear some immediate bills, it could be secured from these three places.
1. Pay Day Loan
Since personal loans with bad credit have strict criteria to be met before they can be approved, some applicants can only be successful in easier, more straight forward situations. This is where pay day loans, also known as cash advance loans, are so useful.
It is one of the most accessible loans for people the bad credit, and is issued against an upcoming pay check, thereby effectively making it an advance payment on what is already on its way. However, they are also very, very quick to get approval on and receive the requested funds, and involve no credit checks at all.
That all seems great, but for those seeking personal loans despite bad credit, the interest rate with pay day loans is very high and the term of repayment can be only a matter of weeks, which may create another emergency.
2. A Company Loan
This is another type of pay day loan, but this personal loan with bad credit comes from closer to home. Many small companies are happy to proved an advanced payment on the salary of their own employees, and to then take a certain percentage of the loan back every month directly from the pay check. This immediately removes the need to agree a payment schedule, and the borrower never needs to worry about making the repayments.
It is a viable solution when lenders usually only approve loans for people with bad credit to a strictly limited amount, and then charge high interest rates. In this case, however, interest rates do not apply.
Getting personal loans despite bad credit is difficult, but because the employer already knows it will pay the borrower anyway, they are assured of getting their money back and are often happy to oblige.
3. The Pawn Store
Finally, the third option is to go to the nearest pawn store, which will issue cash immediately in return for collateral, usually an item of jewelry. Of course, personal loans with poor credit can be successfully gotten from a bank or lending institution if the applicant has collateral.
But the issue here is speed, and a bank will still take at least 24 hours to approve a loan, and perhaps a day more for the money to be lodged into your account.
Of course, once a payment is missed, the pawn store is entitled to take possession of the item of collateral and sell it. There may be a limit of three missed payments but, compared to bank loans for people with bad credit, for example, the loss of collateral is very fast.
Traditional lenders may say no, or hesitate over approvals, but through these sources, personal loans with poor credit can be secured quickly to resolve real financial emergencies.