Having a loan approved by a traditional financial institution seems like an uphill climb more often than not. There are various factors to consider such as documents needed, eligibility criteria, interest rates, and so on. As nerve-racking as it may seem, what about those times when you need money instantly?
People with bad credit scores find it even more difficult to seek loan approval. Hence, they must be equipped to deal with times when a financial emergency strikes. This is why we will discuss the various alternatives at your disposal to seek a loan even with bad credit.
Top Alternatives for People with Bad Credit Scores
1. Salary Advance
A salary advance is a financial product that is usually half the amount of your monthly salary. It is offered by a few companies as an advance to meet your short-term cash needs. Such companies do not treat your credit score as the main criterion for the approval of loans. They have a quick process and usually disburse the salary advance straight to your bank account, right after approval.
2. Loan Against Assets
One of the surest ways of getting a loan if you need money now bad credit is to get a quick loan by pledging your assets. People with bad credit scores can mortgage their property. This will make lenders more flexible in terms of their eligibility criteria and approve the loan that you need. Do keep in mind that the interest rates might be higher as you have a bad credit score.
3. Secured Credit Card
Such a type of credit card is another effective way to have access to quick loans with bad credit. You need to have an FD account to be able to get a secured credit card. Moreover, the credit limit provided is against 70% to 80% of the value of the fixed deposit.
One must note that a secured credit card helps to manage your finance, but it does not improve your overall credit score. It has a positive impact on your credit score only when you clear your past dues or negative account.
4. Peer-To-Peer Lending
It is one of the fastest ways of instantly getting the cash you need. Peer-to-peer lending platforms exist online and they collect the personal information of the borrower. After this, they process the application, and you will receive the cash right after the approval.
One of the major perks of choosing peer-to-peer lending is that the rules are very flexible, and the chance of accessing credit is much higher. While the interest rates tend to be higher than traditional banking systems, it is due to the convenience and ease of application.
There are other alternatives if you need money now bad credit. In times of need, you can seek help from a friend or a relative. The individual can serve as a co-applicant wherein he/she will be the primary applicant. His income and credit history will be considered for the loan. It is quite beneficial for those with a poor credit history.
So, leverage any of the aforementioned financial products in your time of need, but choose wisely so that you can tackle your financial situation effectively.