Sometimes, we are stuck in a cycle of debt and are in need of some relief. The cycle also affects our credit scores which in turn makes getting loans a difficult task. Here are 7 tips you can follow to get a loan:
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Loan from friend or family
This is the best option for taking a loan as the credit score wouldn’t be an issue although the relationships might be at stake. -
Bad-Credit Loan
This is not the best option, however, sometimes it is the only option available. It is essential to make sure that you don’t fall into the cycle of debt. -
Co-signed loans
If you have a friend or a family member with a good credit score, ask them to co-sign the loan. However, remember to pay them back as the co-signer would be responsible for the loan which will affect the credit scores of the co-signers. -
Home Equity Line of Credit (HELOC) Loan
HELOC loans are a good option for people with bad credit who own their own homes. The homes must have equity to take a loan. The LTV must be at 80% which is also a requirement for people with good credit. -
Loans with credit unions
Credit Unions offer unsecured loans at a cheaper rate than the banks and other financial institutions as they are not for profit organizations. They also give loans to people with bad credit. -
Peer to Peer Loans(P2P)
In this, individual or investors give unsecured loans to people with bad credit. P2P services connect borrowers with lenders. A good credit score allows you to have lower rates while higher rates are for people with bad credit. -
401(k) Loan
This is the last resort option, once you have exhausted all your options. This is because of the higher taxes on the early withdrawal. Make sure to take a loan rather than straight distribution to avoid taxes and penalties. The interest goes back to your 401(k) account.