04 Sep Can I Get an Emergency Loan with Bad Credit?
Whether your car broke down or you’ve got an expensive medical bill, you might wonder if you can get an emergency loan or not, especially, when you have bad credit.
The ideal answer is yes, you can get an emergency loan with bad credit—but your options may be limited. Although there are companies that market loans for people with bad credit, you’ll want to proceed with caution. Some emergency loans can be extremely expensive and potentially trap you in a cycle of debt.
With less-than-ideal credit scores, you can generally expect to pay relatively high-interest rates, so it’s important to shop around to try to limit your costs.
So, here through this blog, we have decided to make you aware of some emergency loan options for bad credit as well as some alternatives you may want to consider.
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How Can I Get an Emergency Loan with Bad Credit?
“How Can I Get an Emergency Loan with Bad Credit” – every person having bad credit, who is in need of an emergency loan, has this question in mind.
As discussed above, you can get Very Bad Credit Loans but the interest rate for such loans is very high.
There are many lenders that market loans to people with bad credit. While some may promise you quick cash, they can also come with some serious drawbacks.
Here is the list of few types of emergency loans that might be available if you have a credit history with some dings in it — and what you should consider before you apply.
Payday Loan
A payday loan is typically a short-term, high-cost loan that you’ll need to repay by your next payday. Limits on how much you can borrow vary by state, but payday loans are generally $500 or less.
Payday lenders often charge fees that make these loans an extremely expensive way to borrow money. While some states regulate the fees that payday lenders can charge, these loans are still very expensive, often with fees that equate to APRs of 400% or more, according to the Consumer Financial Protection Bureau.
Payday loans come with a risk of trapping you in debt. If you’re unable to pay the loan back when it comes due, you may need to “re-borrow” by rolling it over to a new loan — but that will usually mean paying additional fees.
Payday Alternative Loan
If you’re a member of certain federal credit unions, you may be able to apply for a payday alternative loan, a.k.a. PAL. These small-dollar loans (amounts between $200 and $1,000) have a one-time processing fee that won’t exceed $20 & interest rates can’t be more than 28%.
These short-term loans are often more favorable than payday loans for people who qualify. Unlike payday loans, the loan term on PALs typically ranges from 1-6 months. Plus, there’s also a cap on borrowing: You can’t take out more than three payday alternative loans within six months.
If you’re a member of a federal credit union that offers them, a PAL is a good emergency loan option to consider.
Title Loan
If you own a car, you may be able to borrow against the equity in your vehicle with a title loan. These loans let you borrow a small amount of money that usually be repaid within 30 days.
In exchange, you have to give the lender the title to your car as collateral for the loan. These loans don’t necessarily require a credit check. Once you repay the loan and the monthly fee is charged, you’ll get your car title back. But if you can’t afford to repay the loan, the lender may repossess your car.
Title loans, like payday loans, can also trap you in a cycle of debt. If you’re unable to pay the loan till it’s the due date, you may be able to roll it over into a new loan by paying additional loan fees. Therefore, a title loan should only be considered if you’ve run out of other options.
Unsecured Personal Loan
Unsecured personal loans are a type of loan that doesn’t require you to put up property as collateral to the lender. Unlike payday loans and title loans, these personal loans are installment loans. Meaning you have to repay the amount borrowed, plus interest, over a set period of time.
Unsecured personal loans often have lower interest rates than a typical payday loan and feature longer loan terms. But they also may be more difficult to qualify for because there’s no collateral the lender can repossess if you don’t make your payments.
So, if you qualify for a favorable rate, an unsecured loan would be a good option for you.
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Credit Card Cash Advance
A Credit Card Cash Advance is like taking a short-term loan from your credit card. When you request a cash advance, you’re asking to use the available balance on your credit card to withdraw some money.
But a cash advance may be charged at a higher interest rate than your purchase APR and have transaction fees, likely making it more expensive than the equivalent purchase with your credit card. Cash advances also might start increasing interest immediately, so you’ll probably want to begin making payments shortly after you borrow the money.
Therefore, do the math on your purchase to decide if this option makes financial sense for you.
Alternatives to Emergency Loans for Bad Credit
There may be other options available to pay off your emergency needs. Before you turn out to a potentially high-cost solution, consider these other options:
Ask for A Repayment Plan
If you don’t want to take out a loan, you can always try to negotiate a payment plan or a longer payment period for another bill. Creditors may offer you a low-interest loan or be willing to reduce the amount that you owe. So, it’s a good idea to first talk with your current creditors before exploring other loan options.
Explore Charitable Financial Assistance Grants
Depending on your current situation, you may qualify for an emergency assistance grant or Emergency Loans for the Unemployed. Some states and cities offer hardship grants to their residents. Check with your state or local area to see whether or what hardship grants may be available.
Ask Your Employer for A Loan or Advance
If you’re employed, your employer may be able to help you with short-term financial difficulty. Before you pursue an emergency loan, check with your employer, if they can offer a loan or an advance on your next paycheck.
Use A Credit Card in Your Wallet
While credit cards can come with high-interest rates, those rates are still usually less costly than other kinds of financing loans like payday and title loans. You may also be able to apply for a new credit card with a low or no-interest introductory APR offer.
Using a credit card might provide you the short-term relief that you need. But if you do use one, make sure you have a plan to pay off your balance quickly. So you don’t accumulate too much interest.
The Bottom Line
Once your need for Bad Credit Loans Guaranteed Approval has passed, it’s a good idea to start planning for the next time an emergency pops up. You can start by creating a budget and saving money for an emergency fund.
You’ll also want to think about ways to improve your credit. So, you have more options available to you in the future if you need to finance expenses.
To start, focus on making on-time payments on your current accounts and lowering any existing account balances since those are among the key factors in your credit scores.
So, we hope now you have got your answer for – “Can I Get an Emergency Loan with Bad Credit.” Here we will put an end to this blog.
Till then, you might refer Reading: Can You Get a Business Loan with Bad Credit
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