Nearly one-third of Americans have bad credit. And if you’re one of them, you may think it’s not possible to get a loan in order to help bail you out of your situation.
However, short term loans for bad credit can not only inject you with a little bit of cash, but they can help you build credit. If you get a loan you know you can pay back on time, it will only work positively for your credit score.
In this article, we’ll talk about some options for short term loans if you have bad credit so that you can start deciding which one works best for you.
Payday Loan
Many sources tell people to avoid payday loans, mostly due to their incredibly high interest rates. But, payday loans can help you out of a pickle and might work if you know you can pay the money back immediately.
If you decide to use a payday loan, it is best only to take out the amount you need. For instance, if you get paid $3,000 every month and you have a $500 dental bill due before payday, you might want to opt for a payday loan. That is, considering that you can pay back the $500 as soon as your check hits your direct deposit.
Title Loans
Again, title loans are a type of loan many people are told to avoid. This is because they can get you into trouble, or may force you to give up your car. With a title loan, you’ll typically use your car as collateral, and if you can’t pay the loan back, your ride’s gone with the wind.
So, title loans are an option for those with bad credit, but they should be used only in the tightest of circumstances. You can also use them if, as in the same scenario above, you know you can pay off the loan as soon as you get paid.
Otherwise, it is best to look for an alternative way to get a short term loan.
Cash Loans
Cash loans for bad credit are a good way to get cash fast. The terms of the agreement can vary, from just a few months to a little bit over a year. You can also get a fixed amount of cash, typically ranging up to $5,000.
With a cash loan, you also don’t often have to have a credit score at all. Theoretically, your score could be subzero, and many places will still give you a cash loan.
In order to be approved for the loan, you’ll need to tick a few boxes. While credit isn’t a factor, you’ll need to have a verifiable source of income. This way, they can verify that you at least have the means to pay the loan back.
You also will need to be over the age of 18.
If you meet those two sets of criteria, you’ll likely be on your way to receiving a cash loan. Cash loans do, however, often have a high interest rate.
Peer-to-Peer Lending
Peer-to-peer lending sites exist to allow individuals to profit from lending money to people. Often, they are wealthy individuals who will lend money to people or businesses, and sometimes, they will accept people with less than stellar credit scores.
The incentive for them is, of course, that they earn interest on the money you’ve taken out and owe them. Interest rates can vary widely from site to site, and may even vary from borrower to borrower. Because of this, you’ll need to be aware of the terms and conditions before you take part in a peer-to-peer lending scheme.
There are several websites that exist for this purpose. But, you’ll need to be aware that some do have credit score requirements. Many don’t lend to individuals who have a credit rating of below 650 or so. This is a fair to below average credit score, so you may not have the chops to borrow from them.
Interest rates vary from site to site or borrower to borrower, so beware of this before signing on the dotted line.
Installment Loans
Personal installment loans may be available for people with poor or bad credit. They also generally offer a lower interest rate than other types of personal or short term loans.
If you get a short term installment loan, make sure that the terms are short enough so that you pay back the loan quicker. While you may think that paying off a loan in a couple of years is a good idea, you’ll quickly find that you’ll pay much more in interest if you wait longer to pay off your loan.
Use the short term installment loan as a way to build up credit while you pay for something you need right away.
The Best Short Term Loans for Bad Credit
The best short term loans for bad credit are those that work best for you. You should not only use the short term loan as a way to get to a goal, or to the next step in life, but also as a way to help rebuild your credit.
Getting your credit score back into an acceptable range should be a goal for anyone with bad credit. And this can be your opportunity to do so. Don’t waste it by dropping the ball and creating even more trouble by choosing the wrong terms or lender.
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