Whether you are on a fix and need quick cash to fix your car or pay that medical bill, you might be wondering if it is possible to secure emergency cash loans with bad credit. Well, even though there are lenders who market loans for individuals with bad credit, you will want to proceed with caution. That's because some loans have very high-interest rates and can easily trap you in a debt cycle. In this read, we are going to break down a few emergency cash loan options you might have with bad credit.
Payday Loans
A payday loan is a short-term high-interest loan that you're required to repay the next payday. These loans are usually up to $500, but limits on how much you can borrow vary from region to region. Payday lenders usually charge fees that make these emergency loans costly to borrow money. Whiles some countries like the U.S regulate the fees that lenders can charge, they are still expensive and can easily trap you in a borrowing cycle. That being said, only go for payday loans as a last resort.
Title Loans
If you own a vehicle, you can borrow against the equity in the car with a title loan. These emergency loans allow you to borrow a certain amount that usually needs to be repaid in a month. In exchange, you give your car title to the lender as collateral. Title loans do not necessarily need a credit check but have a fee of 25% of the total loan. If you fail to repay, the lender can repossess your vehicle.
Just like payday loans, title loans can trap you in a debt cycle and therefore, it's important to consider them only when you don't have any other option.
Credit Cash Advance
This is like taking a short-term loan from your credit card. You are simply asking to utilize the balance on your credit card to withdraw money. However, a cash advance can have a higher interest rate than your annual purchase rate and have transaction fees, thus making it costlier than using your credit card to make a purchase. Cash advances may ideally start accruing interest instantly and so, you will want to start making payments as soon as possible.
Unsecured Personal Loans
These are loans that do not require you to put up any asset as collateral. Unlike title loans and payday loans, they are installment loans, and therefore, you will have to repay the borrowed amount and interest over a set amount of loan. Emergency cash unsecured loans usually have a lower interest loan that others in this list and usually feature longer terms. However, they can be harder to qualify for since there is no collateral involved. If you qualify for an ideal rate, then an unsecured loan might be the best option for you.
Conclusion
Having bad credit sucks, but it doesn't mean you can't secure an emergency personal loan. All the options in this read can be great sources of urgent cash, but it's important to do your homework and ensure you can pay before borrowing.