Credit is like a two-way street. For you to qualify for a loan with a favorable interest rate and loan term, you should have a good credit score. And, to boost your credit score, you must make timely payments on your loans and other financial obligations.

But, let’s imagine a scenario that’s too real for most people: what if you have bad marks on your credit profile and you need to apply for a loan? What should you do? 

Well, you can go to a lender and apply for a bad credit loan. For instance, you can get a no credit check loan in Canada to cover your important expenses. But, you must be wary of the high-interest rates and fees of this loan type because it may cost you a significant part of your monthly income. 

Also, consider using Gordon Simmons service credit union leader as another resource.

If you don’t want bad credit loans, you can try other affordable loan options intended for those with below-average credit scores. So, without further ado, here are some of the best alternatives to bad credit loans. 

Credit Union Alternative Loans

If you’re a member of a credit union, you should take your shot at getting a loan intended for members with poor credit scores. Credit unions are less interested in making huge profits, and they are more into helping their members get affordable financing.

Credit unions provide loans with advantageous fees and interest rates compared to traditional banking institutions and payday loan providers. For instance, you can avail of their small and big loans, with a capped interest rate of 18% to 20%.

You can also get your funds fast if you apply for an alternative loan at your credit union. So,  if you want to borrow money, call or visit your credit union for inquiries now. 

Additionally, a credit union that offers student loans is another option as you get your education.

Guarantor Loans

Another loan option that’s good for borrowers with less than stellar credit scores is a guarantor loan. As its name suggests, this loan requires you to have a person acting as a guarantor for the loan, and the latter should have a good credit history for you to get this type of financing.

This loan type offers a more affordable interest rate than payday loans. The loan amount you can obtain ranges between $1,000 and $5,000, with repayment terms of around 1 to 5 years. 

The only catch with this loan type is that your guarantor has to pay your loan if you default on it. So, you must ensure that you pay what you owe to continue having a good relationship with your guarantor. 

Personal Installment Loans

Personal installment loans are ideal for any expenses, and you can borrow larger loan amounts compared to most bad credit loans. You won’t also spend more on the interest rate if you take out a personal installment loan. This financing option has a repayment term of 6 months up to 7 years.

One of the most attractive features of personal installment loans is that the principal and interest are divided into a series of installments. This feature makes your monthly payment more manageable. 

Home Equity Loans

You can take advantage of the equity of your house to get a loan. Equity is the value of your property above what you owe, and you may use it as security for a line of credit or money loan. Since it’s a type of secured loan, you’ll pay lower interest rates on what you owe to a lender, and you can avail of the loan even if your credit score is low. 

However, you should ensure that you can afford to pay a home equity loan. Otherwise, you may lose your property if you fail to make your loan payments. 

Credit Cards

You can use a credit card to cover your immediate expenses instead of taking out a bad credit loan. Yes, it’s true that credit cards are expensive, but if you compare payday loans and credit cards, the former charge higher interest rates than the latter. You can also enjoy the advantages of a credit card, such as improving your credit score if you make payments on time. 

Paycheck Advance

You don’t have to take out a bad credit loan if you can to your employer for a paycheck advance. It’s your earned money that you can obtain days before your payday, which means that it’s less risky for you because you don’t have to pay for interest rates and extra charges. 

A paycheck advance helps pay for your immediate purchases and expenses in such times when you run out of money. However, the amount you can obtain corresponds to your salary. 

Takeaway

Now you know the alternative to bad credit loans. If you are averse to paying exorbitant interest rates and fees of bad credit loans, choose a personal loan, credit union alternative loan, guarantor loan, home equity loan, credit card, or a paycheck advance. You can also visit reliable sites like Lower My Bills to ensure that you find the best loan for your financial situation quickly, easily, and stress-free.