It takes but an instant to ruin your credit history and what seems like a lifetime to improve it. Though you may have been dealt a bad hand that resulted in the demise of your credit score, there are ways to bounce back. As you start to recover from the poor financial decisions of the past, however, that doesn’t mean that something can’t arise requiring you to have the cash to deal with it. If you’ve got bad credit, you may be thinking there isn’t much hope for getting fast cash, however, the opposite is quite true. Below are a few types of loans that may help you out.
Perhaps the most common loans for people with bad credit is the payday loan. These are very short-term loans through mostly online lenders. They don’t require you to have any collateral, your credit doesn’t have to be exemplary, and you don’t need a lot of financial documentation to apply. Most applications are completed online and only take a few minutes.
To be eligible you’re required to be at least 18 years old, have an income that meets their minimum monthly requirements, and be the holder of a checking account in good standing. If approved for the loan, borrowers generally receive their funds deposited into their account within 24-48 hours.
There is a catch, however. Payday loans are thought of as predatory financial products because they prey on the pockets of those who are already in financial trouble. With these loans, you’re expected to pay them back within 14 days (or your next scheduled payday) to avoid paying high fees. An extension fee which can range in amounts and is based on what you've borrowed and the lender you chose, is an option. However, continually extending the due date on your loan increases the amount of money you’ve paid to the lender and does nothing towards the principal balance or interest rates on the bad credit loan. Therefore, this is only ideal if you need to borrow a few hundred bucks and can pay it back on your next paycheck.
Short-term installment loans are payday loan alternatives
. They too are geared towards consumers with bad credit, however, there are some significant differences. The eligibility requirements are the same and funds will be deposited into your account within one business day. Eligible applicants can get anywhere from $100 to $1250 within 24 hours to do handle their financial problem.
The difference between an installment loan and a payday loan is the repayment options. With a payday loan, you’re expected to repay within 14 days, which may not work for your budget, forcing you to pay for an extension after extension. An installment loan, on the other hand, breaks your loan balance and interest down into smaller amounts allowing you to repay your debt over the course of a few months. This tends to fit in the budget a bit better and lessens the likelihood that you’ll end up in a web of debt.
Credit Rebuilder Loans
If your need for cash isn’t urgent and you’d like to borrow money while improving your credit, a credit rebuilder loan
may be the best option for you. It works very similarly to a secured credit card. Instead of a lender asking you for an asset as collateral to lower your risk as a borrower, they will instead require you to make a cash deposit into your checking or savings account. The amount you deposit is the loan amount.
For example, let's say you want to borrow $500. The lender would deposit $500 into an account (not for your use yet). You’d then make payments each month, including interest until you’ve reached $500. The lender reports these timely payments to the credit bureau which helps to improve your credit. Once you’ve made all scheduled payments, the $500 is then released for your use.
Having bad credit really does present a challenge when you’re in financial need, however, it is not the end of the world. There are lenders out there who are still willing to take a chance on you despite what your financial past looks like. If you’ve found yourself in a jam, are in need of extra cash, or simply want to improve your credit score, consider the options above. Whether you opt for a payday loan
, installment loan, or credit rebuilder loan, be sure to borrow responsibly to avoid further negative action on your credit report.