5 Alternative Loan Options
Posted on: 30 June 2017
Everyone has some financial problems at some point, and you may be considering taking out a loan to pay for some sudden expenses. However, if you have poor or no credit, getting a loan through a bank or credit union can be impossible. Luckily, there are alternative loan options available that may not require you to have excellent credit. Check out these five alternative options for obtaining a loan.
No-Credit Lenders
Believe it or not, there are some lenders who actually aspire to help people with no or low credit, so they can start getting their credit back on track. Depending on your credit, you may end up with a higher interest rate than with someone with good credit, but there are many options, and different lenders offer different perks. You will need to do some leg work to find a lender that is perfect for you because there is no one-size-fits all solution.
Peer-to-Peer Loans
In a nutshell, a peer-to-peer loan is much like simply borrowing money from a friend or family member without all the possibility for drama. Peer-to-peer loan companies allow you to post your request for a loan. Lenders browse through these to find ones they want to finance. Because there are no big businesses involved, the lenders are often willing to loan to people with poor or no credit. The benefit for the lender is they make money on the interest as you repay. Most likely, they'll still prefer people with decent credit, but you have a good chance.
Home Equity
If you own your own home and have some equity in it, it really doesn't matter how bad your credit is because you have collateral. Another advantage is that they interest rates for these loans is usually low. Typically, you can either have a second loan or add the loan money to your mortgage, depending on your situation. However, because you are using your home as collateral, there could be serious consequences if you don't repay your loan.
Payday Loans
You've probably seen commercials for all kinds of payday loans, and they can be beneficial if you need money fast and can repay quickly. For payday loans, you usually only need ID and proof you have a job. Some similar companies may require some collateral, such as your car title. Payday loans are great because you usually just need a steady job to get one. However, these loans are best if you know you can absolutely repay the debt on time. This is because if you fail to repay on time, the debt can roll over, and the interest may even increase.
Other Equity
Your home and your car may not be the only thing you have of value. If you have expensive items, such as jewelry, antiques, electronics, etc., you may be able to get a loan form a pawnbroker. A pawnbroker is one of the simplest kinds of loans. You simply take in an item of value, for example you can pawn a diamond ring, and the pawnbroker will give you what they think its worth. If you can repay the amount within a certain time, the item is returned to you, but if not, you lose the item, but you don't have to repay the money, making it a great option if you aren't sure if you'll have the money to repay the debt soon.
Don't only rely on strict banks for loans. While they are an incredibly common and popular option for obtaining loans, they aren't the only way. These alternative options are perfect when you have little or poor credit. For more information, contact a lender you're interested in trying today.
Share