What Are Your Options in an Emergency

While the British economy is finally showing signs of recovery, hundreds of thousands of UK workers are still struggling to make ends meet. Many are living paycheck to paycheck, with a little left over for savings. With low wages and limited savings, you may have very little wiggle room in the face of an unexpected expense. A loan might help, but your credit rating may be less than stellar, which can make it difficult to secure the emergency funding you need. However, there are financing opportunities available for people with poor credit, so it’s important to understand the available options.

First Things First

Before you apply for any loan, it is important to consider your financial situation. You need to understand what you can realistically afford to borrow, and how you are going to repay the loan. You must also consider your financial need. If, for example, you need to cover a minor car repair a quick and easy payday loan might fit the bill. However, if you need to repair the roof on your house, a longer-term loan will be necessary. In short, know what type of loan you need, and how you are going to repay it, before you start looking for a lender.

Now, if you have bad credit the ideal situation is to find a lender who will agree to a loan without running a credit check. Admittedly, no credit check loans can be difficult to find, but they are available and in an emergency, you go where the money is.

Secured Loans

If you need a short-term loan for something like a home repair, a no-credit check secured loan might be the answer. Unsecured loans are based wholly on the applicant’s credit history, and if you’re deficient in that area you are unlikely to qualify regardless of the amount you want to borrow. Secured loans, on the other hand, are based on the collateral you bring to the table. If you have personal assets, like a home or car, you may be able to qualify for a short-term secured loan without undergoing a credit check. The collateral acts as an assurance for the lender, giving them recourse should you default on the loan. This is the best option for people with damaged credit, as secured loans typically offer more attractive lending rates.

Peer-to-Peer Loans

Peer-to-peer lending has grown considerably over the last few years and has become a viable option for those looking for short-term low-interest loans. Sometimes called Social Lending, P2P loans bypass the traditional banking system by allowing individuals to lend money to other individuals. Peer-to-peer brokers match lenders who want to make a modest return on their investment with borrowers who need short-term loans. Loan amounts are typically modest, but for those with compromised credit, P2P is a good option for short-term affordable loans. If your credit history is not so much bad as non-existent, peer-to-peer lending might be a good fit.

No Credit Check Payday Loans

Finally, we come to the no-credit-check payday loan. Payday loans have come under fire in recent years, but they are often the best, and only, option for people living paycheck to paycheck. In an emergency, a payday loan may be the best option, particularly if your credit history precludes any other type of loan. Payday loans offer quick approval, and funds can often be wired to your bank account within 24 hours.

Always consider borrowing options thoroughly. Interest rates are high on payday loans, as are late fees and default charges; so tread carefully. However, if you are looking for a short-term loan to cover a minor emergency, a payday loan can provide the quick cash you need.

People with bad credit have fewer options when it comes to borrowing money. In many ways it’s a vicious cycle; poor credit keeps you from building good credit. But there are loan options available for those with compromised credit histories, and in an emergency, they provide a viable financial fix. Of course: Consider your financial situation carefully and borrow responsibly.