Personal loans are good tools when you run into an emergency or want to buy something out of your budget. They can help you pay those unplanned or expensive bills when you don’t have enough savings, provided you can repay your debt within the loan terms.
A personal loan is incredibly versatile, meaning you can use it for anything, including investing. A personal loan can be an investment in your business if you use it to buy much-needed equipment or pay for expert services. You may also consider taking a loan to invest in stocks or a high-interest savings account. Still, before doing this, you need to calculate if the dividends you earn will be more than the amount you will need to repay, including interest and fees.
Personal Loan Types
If you have an entrepreneurial mindset but don’t qualify for a business loan, you can borrow funds in the form of a personal loan to fund your business. There are various personal loan types you can apply for according to your needs and situation.
You can apply to any bank or lender if you have a good credit score. You will likely successfully secure a loan with a low-interest rate and reasonable terms. A personal loan is usually short-term, and you will have between a few months and five years to repay. Depending on the lender, it can take one to five days for you to receive the funds.
Bad Credit Loans
People with poor credit scores will probably struggle to secure loans from traditional lenders and banks. It does not mean that all loan doors are closed. There are options available, and although they can be less than favorable, they could be the only option. Some of these include:
A payday loan may seem like the perfect solution when you’re in a bind or see an opportunity you will miss if you don’t have cash quickly. A payday loan is a very short-term loan where the lender offers you a loan based on your income.
This loan type is attractive to folks with poor credit scores as it seldom requires a credit check. To apply, you need proof of your income, a cell phone number, address, and identity document, and you must be eighteen.
The application process is quick, you can apply online or at the lender’s premises, and your loan can be approved within minutes. You can get the cash immediately or within the day.
It all seems fantastic, but the interest rates are high, the repayment window is small – usually, two to four weeks and there can be additional fees. If you can’t repay the loan and decide to roll it over, more interest and fees will be added.
Like payday loans, title loans also don’t require a credit check, and you can get the cash immediately. However, a title loan is secured, and your car is used as collateral.
To qualify for this loan, you must own a car or, if financed, you must have a minimum balance owing. To apply, you need to take your vehicle to the lender for them to view and evaluate it. The lender will give you a loan of about 25% to 50% of its value.
Title loans have high-interest rates and a short payment period, usually thirty days.
Bad Credit Loan Alternatives
When you need funds quickly, it’s easy to turn to the most convenient option that will get money into your hands fast, but these aren’t always the best in the long run. If you’re looking for a Speedy cash loans alternative, consider the following:
Existing Line of Credit
If you’re pressed for time, another option is to use your existing line of credit. If you have a credit card, it’s easy to withdraw cash from an ATM anytime, so you’re not restricted to business hours. You also don’t need to wait for a loan to be approved since you already have the card.
To use this method, you need to have a pin code linked to your credit card. You can set it up yourself online or with the bank or credit card company.
Remember that the amount you can withdraw is less than your swipe amount and has its balance.
If you have a business partner or a family or friend who has a good credit score, you can ask them to co-sign a loan for you. With them as a co-signer, you will likely get a good loan from a traditional lender with a low-interest rate and a longer time frame to repay it.
A co-signed loan will make the co-signer responsible for repaying the debt if you default on the loan, but they will not have access to the funds. It’s a great option only if you are confident you can repay the loan. If you can’t, you risk ruining your relationship with the co-signer who kindly agreed to help you