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How to Get a Loan When In a Bad Financial Situation

We have all at one time experienced a sudden and unpredictable financial emergency. Illness, Job loss, car breakdowns, need for significant household repairs, unexpected travels or any other unforeseen event that can lead to bills. Few people have good options for dealing with such financial emergencies. Saving up cash is often easier said than done since most people usually live on a single paycheck. However, those who don’t earn enough to cover such necessities have an even much harder time cutting down their expenses. Loans, therefore, come in handy in easing financial stress for the unexpected events.

In this article, we discuss about the different loan options to consider when in a bad financial situation.

Borrowing From Friends and Family

The main advantage of obtaining a loan from family and friends is that your creditor is more likely to be flexible on your payment arrangements. This also comes with low-interest rates. However the main drawback of borrowing money from someone you know is that it may strain your relationship in case things don’t turn out as expected. It’s, therefore, advisable to sign a basic promissory note.

Cash Advances

Cash advances are services provided by most charge card and credit card issuers that enable cardholders to withdraw cash, either through ATMs, over the counter at a bank or other financial agencies, up to a certain limit. Cash advances incur processing fees and daily interests starting from the day the money is borrowed. If you have to travel unexpectedly and need to cover the cost of a plane ticket, you can rely on this as a good source of an emergency fund.

Payday Loans

Payday loans also referred to as check salary loan, or quick cash loan refers to any credit where the lender requires the borrower to write a post-dated check indicating the amount they want to be loaned with plus a flat-rate fee in exchange for instant cash. The lending party then keeps the post-dated check and cashes it on the agreed post-date which is often the loanee’s next payday.

Borrowing From Retirement and Life Insurance

Cash value builds in life insurance policies; a policyholder can borrow against the accumulated funds. One striking aspect of loans against cash value is that one doesn’t have to repay them. This can be a great relief in cases such as sudden illness where one may not be able to repay a loan immediately after recovery.

Auto Loans

Car maintenance is expensive and often occurs unexpectedly. At worst, you have to replace your old car with a new one for convenience. Just like mortgages, auto loans are tied to the personal property you acquire using the loan. As much they may be more convenient, they often carry high-interest rates, and one may risk losing the vehicle in case of defaulted payments.
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