How to Get a Low Interest Loan

People are always short in cash, and not everyone has a sterling, spotless credit score — not in this economy and certainly not with the temptation of mall sales right and left. Emergencies happen, and everyone’s looking for the friendliest financial solutions. A bad credit loan therefore isn’t anything so shocking these days anymore.

Loans for people with bad credit are designed as short-term cash solutions for those with low credit ratings, and therefore are unable to get regular loans offered by most banks and lending institutions. But while they win the points when it comes to convenience and ease, these loans for people with bad credit also have their downside, foremost of which are the exorbitant interest charges.

So what other options do you have? Here are four other ways you can get your needed cash if you have bad credit.

Credit unions. Credit unions are synonymous to cooperatives, financial institutions whose members are comprised of a particular professional group, such as teachers’ groups, or community associations.

In addition to regular loans, they also offer short-term loans for people with bad credit that are relatively friendlier on the wallet compared to most online payday loans. While most short-term lenders charge about 20 – 25% in interest, credit unions charge only an average of 18%.

Loan co-guarantor. If the amount you need is considerably larger than what is usually offered by short-term loans, another option for you if you have bad credit is to get a regular loan with the help of a co-guarantor.

If you can get someone with a good credit rating and is willing to co-sign a loan with you, a regular loan can be more advantageous than a short-term loan. Payment terms are friendlier, and the interest rate is more manageable.

Salary/cash advance. If you’re employed, you don’t need to turn to a payday loan lender just yet. Another option for a loan for people with bad credit is a cash or salary advance that you can request from your employer. Check with your company’s accounting/finance office if you can advance next month’s salary. This wouldn’t cost you any interest charges, although because this is a cash advance, this means you’re not getting anything else when the next month rolls around. This requires careful and proper budgeting so that you’ll have some money left to tide you over until the following month.

Loan from family and friends. Family and friends are one of the most convenient alternatives when it comes to loans for people with bad credit. Borrowing money from people you personally know takes away the stress of interest charges, delayed payments and penalties. In fact, check with them first before turning to any third-party or external lender.

There is more than one way of getting a loan if you have bad credit. Be sure to explore these options first before you get a payday short-term loan that can only bring you undue stress and headache.

However, getting a payday loan and other types of loans for people with bad credit offered by lenders may also benefit you. If you wish to repair your credit so you’ll be able to qualify for a low-interest loan later, it is necessary for you to borrow from companies that will report your payment history to credit reporting agencies. Make sure though that you are aware of the risks of borrowing money through such options. Any late payments can also further hurt your score.