Life is unpredictable, and you never know what could happen next. Sometimes you may find yourself in situations where quick financial decisions need to be made.
Whether it’s an emergency or an unplanned expense, identifying the right solutions for your financial problems during times of crisis can become complicated. These problems can look bigger if you have damaged credit.
Fortunately, from bad credit payday loans to credit unions and overdrafts, there are still many ways to turn your financial situation around. Choosing what option is the best for you isn’t an easy task and you need to understand how each option works to make the best choice for your specific situation.
In this article, we’ll examine short-term loan options that could help you get through financially challenging times. These loan options are designed for those with poor credit and are exactly what you need to get back on your feet.
1. Payday Loans
There are many types of short-term loans, one of the most popular being payday loans. These loans are designed to provide quick money to individuals struggling with emergencies or urgent expenses.
While these loans may be helpful to get through a rough patch, it’s important to remember that they come with high interest rates. If you’re thinking of taking a payday loan, borrow only how much you need and how much you can afford to repay.
Debt is responsibility; if you do not honour it, then you may find yourself in even more debt later on. When used responsibly, payday loans can be a useful tool, but it’s best to rely on them only when you absolutely need them and use them with caution.
2. Credit Union Loans
A credit union is a community-focused financial organisation that offers saving and lending services to its members. Credit union members often share a common bond, such as working for the same employer or living in the same area.
Credit unions offer short-term, unsecured loans with competitive interest rates, making them a flexible and affordable option for short-term borrowing. These unions assess loan applications based on your (the applicant’s) financial status instead of just relying on the credit score. A credit check may still be involved, but it’s not the only thing that matters on a credit union loan application.
Borrowing from a credit union is straightforward, but the approval process might take longer compared to payday loans due to their meticulous application reviews. Nonetheless, credit unions offer manageable repayment terms as well as lower interest rates, making them a good choice for any borrower with poor credit.
3. Online Lenders
Short-term loans have become more accessible than ever before with the introduction of online lenders. Many online lending platforms offer multiple loan options for borrowers, with approvals taking only a few hours.
Some online lenders cater specifically to individuals with damaged credit or low credit scores by offering bad credit loans. These loans don’t heavily rely on your credit score but on your current financial situation and ability to repay the loan instead.
When choosing an online lender, carefully evaluate all your options. Look for a reputable lender with good reviews who is offering a fair interest rate and is transparent with their loan terms.
4. Overdrafts
If you have a bank account, an authorised overdraft could be a viable option for any short-term financial needs. An overdraft allows you to spend a certain amount beyond your account balance, up to a limit set by your bank.
Bank overdrafts typically come with interest charges or fees, but they’re still less costly compared to payday loans when it comes to short-term borrowing. Overdrafts are ideal for covering unexpected expenses or when you’re a couple of days away from your next paycheck.
When applying for an overdraft, it’s important to look at your bank terms first to make sure you can repay the overdraft in the agreed-upon time. If you fail to do so, it could lead to additional charges.
5. Borrowing from Friends or Family
When you’re facing financial difficulties, it’s completely understandable to turn to your friends and family for help. Sometimes, a small loan from someone you trust could be the lifeline you need to get back on your feet.
However, you need to approach this option with care. Clearly communicate how and when you’ll be able to repay the money lent to you to minimise confusion. To make things easier, create a repayment plan. This would give your friend/family member some peace of mind and help maintain a sense of trust.
It’s okay to ask for some support when you need it, but you need to be open and honest to preserve the bond you share with your loved ones.
To Sum Up
When you’re faced with urgent expenses and are struggling with damaged credit, short-term loans could be a valuable solution. From payday loans to overdrafts and credit union loans, there are multiple things you can do to regain control of your financial situation.
The key is choosing the right option for your specific situation. As with any other important financial decision, compare the terms of different options and assess what works best for you.
Even with a damaged credit score, these short-term borrowing options can provide the support you need to get back on track.
