When you are desperate for a personal loan, it can feel like your back is up against the wall and it is easy to make poor decisions that can cause financial ruin.
Many reasons why you would be desperate for a personal loan
There are many reasons why someone would be desperate for a personal loan including car repair, medical or emergency travel. There are many sources available to obtain personal loans.
Loan sources when desperate for a personal loan
Traditional lenders such as banks will offer personal loans. If you have a good standing with the bank and do your banking with them they may provide you an unsecured personal loan with small interest and fees for the short term.
This is a fair and equitable way to go if you have good credit, a reliable job and a history of regular income that is easily verified by the bank.
If you are new to the bank or don’t have great credit, the bank may require collateral. The type of collateral they look for are cars that are unencumbered, equipment or possible a second mortgage.
The downside of working with banks is the paperwork and hoops that need to be jumped, in order to get the loan. Decisions are not always made quickly either.
Non-traditional lenders are appearing that offer personal loans with little to no paperwork with simple online applications. These lenders charge significantly higher interest rates than a traditional bank and the rates may be much higher for those with poor credit.
The positive about these kinds of personal loans is they can structure repayment over a length of time that is suitable to your financial circumstances.
They often set it up to have automatic withdrawals from your account for monthly payment and if you default your loan will be sent on to collection and credit bureaus.
The advantages are they have fixed interest rates and don’t require collateral. Also if you establish a payment history with them, they will be more likely to lend to you in the future.
Payday loans can still help
Payday loans are another option. The payday loan has been around for a long time and has acted as a safety net for those who are desperate for a personal loan. They work by lending you money against your next pay cheque.
The rates of interest are extremely high and if you are unable to pay they charge large roll over fees and may increase the interest rate. This can quickly spiral into financial doom if not paid in full immediately.
Annual Percentage Rates with payday loans can reach into the 1000 percentile and should only be used if you are sure you can repay it with your next pay cheque.
Car loan finance too
Vehicle title loans can also be a great source for those who are desperate for a personal loan. You sign the title of your unencumbered vehicle over to the lender who gives you the money.
As with the other personal lenders, the rates are very high and fees can be overwhelming. The danger of this type of loan is you can lose your vehicle by repossession if you are unable to pay the loan in time.
Any personal loan you seek should be carefully considered before making any rash decisions that could cause an even greater financial crisis down the road.