4 Funding Options for People with Less-than-Perfect Credit

Finding a way out of financial hardship can seem all but impossible when your credit isn't good enough to facilitate approval for a conventional loan or financing solution. The bills keep piling up along with your total debt owed, and without some form of assistance, it can seem like there is no end in sight. If this sounds like the predicament you're currently facing, you can at least take comfort in knowing that there are funding options available for people with poor credit. 

funding options

However, the loan terms and conditions are usually not as favourable as those offered to borrowers with good credit. Still, if you're in need of funds right now and you can't afford to wait until you've repaired your credit score, consider the following four funding options that can help people with less-than-perfect credit:

1. Taking out a Loan against Your Vehicle's Title

If you own your vehicle and it is a fairly new model, you may be able to borrow several thousand against your vehicle's title. However, keep in mind that if you are unable to repay the loan then the lender would have the right to seize your vehicle and take it into their possession, so there is some inherent risk involved in this type of loan. Furthermore, many car title loans charge very high interest rates in comparison to a typical personal loan, so it would be wise to make sure you'll be able to adhere to the proposed payment plan before taking out a loan of this kind. 

2. Applying for a Payday Loan

If you have a steady source of employment and can show proof of income you may be able to get approved for a payday loan, even if you have horrible credit. According to www.verymerryloans.com, these loans are only short-term solutions, as you'll be required to pay the loan back in full on the date of your next pay cheque.

As such, most payday lenders will require that you write them a cheque for the amount that will be paid back, so that they can cash it directly from your account on the date of your next direct deposit from your employer. If you repay these loans on time you'll only lose a small fraction of your pay cheque. However, if you fail to repay the loan, you'll end up owing several times the amount of your cheque in the long-term.

3. Peer-to-Peer Lending

Another way to take out a loan if you have not-so-great credit is to apply for a loan on a peer-to-peer lending network like Prosper. These loans are actually offered by independent investors rather than financial institutions or conventional lenders. As such, many of the lenders on these networks will provide small loans to people with modest credit scores, as long as you have a good reason for wanting the loan, a way to prove your income, and a halfway decent credit score, you may be able to borrow several thousand on a peer-to-peer lending network.

4. Starting a Crowdsourced Fundraiser

Finally, if you have an idea for a product, service, charity, event, or other worthwhile project that might attract the interest and investments of other like-minded people, you might want to sign up for one of the top crowdfunding sites and set up a detailed fundraiser page. Credit is a complete non-issue on these sites, as you're not actually borrowing any money, you're collecting donations to go towards the development of your project. With that said, this is only a route to take if you have a legitimate cause that needs funding.

There's an old saying that goes “just because you can, doesn't mean you should.” Many people with poor credit have made the mistake of making their financial situation even worse by applying for loans with incredibly high interest rates and over-committing to repayments that they know they won't be able to afford. With that said, make sure you have a feasible plan to repay any money borrowed before considering any of the above suggestions.

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