Are you not eligible for a personal Loan? Four Options to Try
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Are you not eligible for a personal Loan? Four Alternatives to Consider
Explore these options for securing an income gap or big bill . Then, start preparing to cover the time you need money.
By Annie Millerbernd Lead Writer for Personal loans, “buy now, pay later” loans, cash advance apps Annie Millerbernd is an NerdWallet expert in personal loans. Prior to joining NerdWallet in 2019 she worked as a news journalist in California and Texas, and as an expert in digital content at USAA. Annie’s work has been mentioned by the media and has been included on The Associated Press, USA Today and MarketWatch. Annie has also been quoted by New York magazine and appeared in NerdWallet’s “Smart Money” podcast, as in addition to local television and radio. She’s based at Austin, Texas.
3 October 2022
Written by Kim Lowe Lead Assigning Editor Consumer lending Kim Lowe leads the personal loans editorial team. The editor joined NerdWallet after fifteen years in charge of the content on MSN.com, including food, health, and travel. She started her career as a writer for publications covering mortgages, supermarket and restaurant industries. Kim received a bachelor’s degree in journalism at the University of Iowa and a Master of Business Administration from the University of Washington.
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Personal loans are quick, non-secure cash that can cover anything from home repairs to medical emergency situations. Instead of requiring collateral like the car or house Many lenders favor applicants with excellent credit ratings and good earnings.
What happens if you fail to meet the requirements of a lender? There are many people who have no alternatives to high-interest, predatory lenders. These options can be helpful in bridging the gap in income, but each comes with pros and cons.
1. Consider alternatives that aren’t borrowing.
Try to come up with the money by making room in your budget and putting in an extra amount of cash, suggests Tania Brown who is a certified Atlanta professional in financial planning and financial coaching. Examine your budget for expenses that you can reduce, even temporarily, like meals out or streaming services.
To reduce the cost of your existing bills, contact the billing company, creditors or doctor’s offices if they offer installment plans that are interest-free, she says.
Also, pair your less-expensive costs with a side gig like ridesharing or selling things you don’t need anymore, Brown says.
2. Borrow from a family member
When you’re comfortable asking your family member to borrow money, it could be one of your cheapest borrowing options. It doesn’t require a credit check or credit reporting, but it may require some extra planning.
Bring a “game plan” that includes the loan amount as well as an interest rate, and repayment term when discussing the matter to take the guesswork out of the process, Brown says. For a small loan it is possible to use an informal loan agreement between you and the lender might be enough. Larger loans might require a formal contract.
In the ideal scenario, an attorney will create an official loan document that both of you agree to, according to Philip Mock, a CFP located within Tulsa, Oklahoma. There is a possibility of having to pay a fee for the time of the attorney.
may come with tax implications, Mock says, so be sure to do your homework when making the loan agreement. For bigger loans or more complex questions you should consult with a tax expert.
3. Split up a big purchase
A “buy now and make a payment in the future” payment plan may help ease the burden of a large purchase by splitting it into multiple smaller payments. BNPL plans are offered by many major stores and may help ease the financial burden of a new computer or mattress, for example.
It’s a quick, easy solution since there’s no credit check or lengthy process to apply, says Kristian Brennon who is a certified financial counselor in Kansas City, Missouri.
Since BNPL providers automatically debit instalments directly from the account. The agent recommends scheduling reminders for payment due dates and making sure your account will not be overdrawn.
4. Take advantage of cash advances
Cash advance apps such as Earnin and Dave offer a quick cash infusion of up to a few hundred dollars, with no credit check and lower fees as compared to payday loans. But like payday lenders, these apps require access to a bank account of the user in order to make the loan available on the next payday.
While they’re convenient, they is it wise to use them sparingly as they can be tricky to budget around, Brown says. The money you take out today could leave a hole that size in your next paycheck, which is why she suggests anticipating that gap prior to borrowing.
“Make sure that you are getting the exact amount you require and that you’ve mapped out a plan as to how you’ll pay it back,” she says.
Build savings over time
Savings is the best option to pay for unexpected and discretionary costs. Mock suggests having three to six months’ worth of expenses saved however having just a few hundred dollars of savings can help pay for the majority of unexpected costs.
If you’re in need of help to build your savings each monthly, Brennon recommends finding professional assistance through the Association for Financial Counseling and Planning Education. The organization is offering free counseling to the public until mid-December.
Make a list of your expenses for the year ahead (such as Halloween costumes , Christmas gifts and more — and budget for them in advance, Brown says. That way your savings can be saved to cover unexpected expenses or income gaps.
“Life will always have ups and downs, and the most important thing is to learn how to managethem,” she says. “That helps to turn the situation that could become a disaster into a minor problem.”
The article was written by NerdWallet and was first published by The Associated Press.
About the author: Annie Millerbernd is an individual loans writer. Her work has appeared on The Associated Press and USA Today.
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