What Are Some Options For Personal Hardship Loans?

There’s three kinds of personal loans you usually hear about when talking about finance, and they’re mortgages, auto loans, and credit cards, although there are some additional bank loans that fall under those categories. Usually banks are the primary authority on loans with some government administrations such as the SBA, FHA and HUD having guidelines for some loan programs. But some independent financing agencies are also out there who offer loans Des Moines IA because most banks won’t approve loans for people with lower income and bad or no credit. But there are other lenders who believe that even these people should have a chance to borrow money if friends or family won’t loan it to them, or their employer doesn’t offer an advance on their paycheck. So what are your options if you need a quick and easy loan before your next paycheck? 

Payday Loans And Car Title Loans Are Fast But Dangerous Loans 

Payday loans and car title loans are often the first lenders people think of when they can’t get loans from the bank. A payday loan is a loan that is offered to bad credit borrowers that is supposed to be repaid once their next paycheck arrives. They’re usually easy to be approved for, but they can have APR interest rates ranging anywhere from 300℅-1200℅ which is why most financial advice magazines say to avoid them at all costs. Some people consider auto title loans, the cousin of payday loans to be marginally better because you usually get more time to repay them, and the way they work is you borrow from the equity in a car you own completely by giving the lender your car title until you’ve paid up. But while the interest rates can be slightly lower on these loans, they’re still very high and if you miss payments on these loans, you could risk losing your vehicle. 

Personal Installment Loans May Be The Best Short-term Loan Option 

Because payday loans and car title loans are so risky but people sometimes have no other choice for borrowing money, there are some other loans that are offered by more reputable financing companies known as short-term installment loans. Not to be confused with certain installment loans like second mortgages or auto loans, these loans are usually made for smaller amounts, but they get paid off in fixed installments often at more fair terms than payday loans and car title loans. Now, they still have higher interest rates than most regular secured and unsecured bank loans, but usually much lower than other predatory loans, and in some cases they even have debt management programs that come with them. Installment loans aren’t perfect, but you should look into them if you’re running short on options. 

Often the best way to avoid falling into debt cycles that result from loans is to set aside money for emergency payments. Before you signup for any loan, make sure the lender is giving you straight answers about what their fees and interest payments are, and make sure you read all the small print. You should always stay away from high interest payday loans unless you truly have no other option, and if you use a payday loan make sure you pay it completely off fast.

 

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