| How to Borrow Money With Bad Credit Oct 2nd 2012, 08:00 If you've had financial problems in the past, it's still possible for you to borrow money. Even if you don't have the credit score to get traditional loans, you can still get unsecured, short-term loans. Here's how to get started. Payday loans - Find a payday loan provider. Search online or ask around to find a company that provides payday loans. Generally, you have two options:
- Brick-and-mortar businesses: These payday loan providers operate out of branches, and might require you to provide proof of income, paycheck stubs, and other indications that you will be able to pay back the loan.
- Online businesses: Approval for these payday loans is generally faster, and funds are deposited and withdrawn electronically. Be prepared with your online bank account information, such as your account and routing number.
- Know the risks. Payday loans are secured, which means they're tied to some other asset. In this case, the asset is your future paycheck. Because they have high default rates, most lenders put high interest rates on payday loans.
- Understand that payday loans are fundamentally short-term. The loan is due when you get your next paycheck, and most people get paid every two weeks.
- Provide the lender with a post-dated check, or with your account number and routing number. The post-dated check (or the ability to withdraw funds from your account electronically) is the collateral for the loan. If you do not return to repay the loan on payday, or if you don't transfer the funds back to the lender electronically, the lender is entitled to deposit the check or withdraw funds online.
Car title loans - Find a car title lender. A car title lender will lend you money based on the market value of your car, at a high interest rate and over a short term. The upside is that car title lenders do not generally run credit checks––the loan is based on the value of your car alone.
- Make sure you possess the actual title to your car. If you need to seek a replacement, contact your state's department of motor vehicles. (See Sources and Citations below for more help.)
- Be aware of the term of the loan. The term is simply the amount of time you have to pay back the loan, before the lender can sell your car to recoup costs. Make sure you mark this date somewhere.
- Check your state's regulations for car title loans. Some states, such as Illinois and California, have specific regulations in place for car title loans. Check your state's Department of Motor Vehicles website for more information.
Refund anticipation loans - Contact a large tax preparation firm for a refund anticipation loan. Refund anticipation loans (RALs) use your anticipated tax return as collateral, with a high interest rate.
- Go through a big company. Many small tax preparation firms used to do RALs. However, in 2011, the IRS stopped providing RAL providers with a prior indication of whether or not the taxpayer still owed federally-paid obligations such as child support, running the smaller firms out of business. Be extremely suspicious of a small firm offering RALs.
- Be aware that refund anticipation loans began when it could take months for a tax return to process. With the advent of electronic filing, most people can have their tax returns deposited directly into their bank accounts in under two weeks. Consider seriously whether or not you need an RAL.
- Prepare your taxes at the same time. Most tax preparation firms offer a package deal, where they'll both prepare your taxes and help you with an RAL. Ask about special promotions.
- Be aware of fees. Tax preparation firms are allowed to charge you a set fee for doing your taxes, though they are not allowed to change this fee based on how large they expect your tax return to be. In addition, if you're getting an RAL, the firm is allowed to charge you a fee to set up a temporary bank account, in which your return will be deposited and then withdrawn by the firm.
Pawning - Pawn an item at your local pawnshop. When you pawn an item, a pawnbroker agrees to pay you a certain amount of money for it. He or she will then hang on to the item for a pre-determined amount of time, during which you're allowed to buy the item back plus interest. If the term passes without you re-purchasing the item, the broker will sell it to recoup costs.
- Try not to pawn anything you'd be heartbroken to lose. Once the term is up and the pawnbroker sells the item, that's it––there's no legal recourse for you to get it back.
- Understand that the pawnbroker will pay you below market rate for the item. The reason for this is that he or she will bear the risk of selling the item at market rate down the line, and the profit comes from taking the risk. Be prepared to take a 20-40 percent hit on market rate, if not more.
- Keep the item ticket. When you pawn something, the pawnbroker will give you a ticket or receipt, which you can use to purchase the item back later. Keep it in a secure location.
- Note the term. When the transaction is complete, make sure you write down the date on which you have to return and buy back the item if you want to keep it. Make sure the pawnbroker will hold it until the end of the day listed.
Cash advances - Take out a cash advance with your credit card at a bank. If you have a credit card issued by a major corporation (such as Visa, Mastercard, Discover, or American Express), you should be able to take it into your local bank branch and ask for a cash advance. Basically, you'll be borrowing money against your credit card at a much higher interest rate than your usual transactions.
- Be aware of which purchases constitute a cash advance. Going into the bank isn't the only way to get a cash advance on your credit card. However, there are certain transactions that the credit card company will treat like a cash advance, and which will be subject to a higher interest rate. These include:
- Money orders
- Lottery tickets
- Gambling chips
- Certain government taxes and fees
- Try to pay back the cash advance by your next statement. If you fail to do so, the interest will carry over to subsequent payments.
Logbook loans (UK only) - Be in possession of your car title, or "logbook". Logbook loans can be completed in as little as 15 minutes, and involve writing up a bill of sale for the vehicle as collateral for the loan.
- Provide proof of income. You must be able to show that you have a steady income in order to qualify for a logbook loan. Pay stubs or bank account statements showing direct deposits can help you accomplish this.
- Be aware that the lender can repossess your car without a court order. Logbook loans are risky and frowned upon because interest rates are high, and repossession will be immediate if you default on the loan.
- Because these loans are considered high-risk for the lender, interest rates will be high.
- Always ask about fees, interest rates, repayment schedules and deadlines. Keep all of this information in once place, where you can access it easily.
- Have your information ready before applying, such as identification, references and banking information.
Edit Warnings - Most of these loans are meant to be short-term solutions. Try not to get caught in a cycle in which you're relying on these loans to pay your regular expenses––the high rates will wreak more havoc on your finances.
- Not all of these suggestions are applicable in every country. Be sure to check local laws and regulations with respect to lending and borrowing.
Edit Related wikiHows EditSources and Citations | |
No comments:
Post a Comment