You try to save as much as you can, but your cost of living is so high that sometimes, you simply can’t afford to put away as much as you’d like.
Now, you’re in need of cash — and you’re thinking of applying for a loan.
But when is it the right time to apply for bad credit loans, and what can they help you to accomplish in your financial life?
This post is here to help you find out.
From covering medical bills to avoiding the endless cycle of credit card debt, read on to understand when loans for people with bad credit can serve as your saving grace.
1. You’re Facing Unexpected Expenses
About 40% of Americans say that they don’t have the savings to cover even $400 worth of emergency expenses.
If you’re among them, then something like a car repair, a medical emergency, or even a funeral could become even more of a disaster than it already is.
One of the best things about personal loans for bad credit is that you can use the money for nearly anything you’d like. You don’t have to prove to your lender that you’re spending it in a certain way.
Instead, you can use it to finance anything from your medical bills to consolidating your credit card debt. This level of flexibility in terms of spending is one of the most attractive things about loans for bad credit.
2. You Don’t Want to Take on More Credit Card Debt
The average American has well over $6,000 in credit card debt — and the level of debt is at its highest in several years.
It’s easy to overspend when you’re using a credit card. You never actually see the money leaving your wallet, and you know that you can always up your credit limit it need be.
When you’re buying something with a credit card, you don’t usually think about the cycle of debt you could get trapped in because of high-interest rates.
Interestingly, personal loans, even bad credit loans, often carry a much lower interest rate than credit cards. This means that you’ll be able to pay off the balance of the loan much faster than you would your credit card debt.
3. You Have a Low Credit Score
So, your credit score isn’t exactly ideal, and you’re convinced that your credit history will prevent you from getting approved for any kind of a loan.
The good news is that as long as you can prove you’re a resident of your current address, show an active bank account, and in some cases, provide a letter of employment, you’re not as shut out from loans as you think.
There are plenty of lending options designed for those with a low credit score.
Interestingly, if you pay back your loans on time, you can even use the monthly payments you make to slowly improve your credit score. This is because you’re proving to lenders that you’re capable of borrowing money and paying it back.
Looking for more information on loans for people with bad credit? The folks at Bonsai Finance have put together an extremely helpful guide that makes it easy to sort through your borrowing options.
4. You Need the Funds Quickly
When you’re facing a true emergency, you may simply not have much time to wait to get the money you need.
Perhaps you can’t receive the medication you need until you can pay for it. Maybe you’re at risk of losing your house. You may want to use the money from bad credit loans to pay for a wedding, help you prepare for a baby, or fix your car so you can get to work.
One of the best things about personal loans?
The application process is simple and short.
In some cases, you may even be approved for the loan in as little as 24 hours from when you submitted the application.
When you can’t wait, look into lending options that don’t force you to.
5. You Need a Good Amount of Cash
Yes, even if you have bad credit, you’ll still likely be able to borrow more cash than you might think.
Unlike other lending options, like payday loans, personal loans have a higher borrowing amount. This way, you can manage expenses that run in the thousands of dollars range as opposed to the hundreds.
One important tip to remember when you’re deciding on the amount you should borrow?
Be certain that you borrow the lowest possible amount that you need to get by. Also, ensure that you’ll be able to pay back the loan in full by the end of the term.
Take a look at your current budget and spending habits. Can you cancel any of those subscription services? Can you go without eating in restaurants for a month?
Look for the things you can cut so that you can prioritize getting your finances in order.
Bad Credit Loans Are the Solution You Need
We hope that this post has helped you to better understand when you should apply for bad credit loans.
Remember, above all, to borrow wisely. Do your research when it comes to the interest rates, lender, and any fees associated with the loan.
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