Because it is not always possible to borrow money from your bank, you might need to know at least three ways to borrow some cash.
Due to bad credit, being blacklisted or not having a steady income that qualifies you for a loan from a reputable and well-known financial service provider, or because of the recession, banks might not be willing to give you a loan. There are several ways to find a loan other than from your bank, and as long as you are clued up on all the terms and conditions and what you are getting yourself into, there is no reason you could not try to find a loan from someone other.
The dangers
However, if you cannot find a loan from a reputable financial service provider, there are probably good reasons why you do not qualify. If you do not have a steady income that will cover your essential living costs and your monthly loan repayments, or if you have a bad credit record or if you have been blacklisted you should try not to get yourself into any more debt.
If you can keep your credit record clean and keep yourself out of overwhelming debt you would be putting yourself in a better position. However, even people who are not entirely eligible for a loan might still need money quickly for something they cannot afford with their monthly income. If that is the case, and you need a loan desperately, you will have to consider getting a loan from someone else. You must then find out all the terms and conditions and have a clear understanding of what you are getting yourself into and whether you can afford to pay it back.
Three ways to borrow money other than from your bank
- Borrowing from a peer to peer lender
A peer to peer lenders allow people to invest money in a lending system and then lend the money to other individuals in the form of personal loans. The investors make money on the interest as do the peer to peer lenders. You will not need a perfect credit record, but you will need a decent record. The interest rate on this sort of loan is usually quite high. It ranges from between five percent and 35 percent.
Also, there may not be enough money for you to lend the amount you need. If the investors do not invest enough, or if there are too few investors, there will not be enough money for you to take out the loan that you need. A good way to counteract this is by asking your friends and family to invest in peer to peer lending. If you take a second loan out with peer to peer lending, and if you had a good credit rating on paying back the previous loan, you will get a better interest rate. Make sure, however, that you choose a reputable lending club and do not get in over your head.
- Borrowing money from friends or family
If you have friends or family who have enough money to lend you, it might be a good idea to ask them for a loan. You and your lender can come to an agreement on the terms of your loan as well as how much interest you will pay or if you will pay interest at all.
If you do get a loan from someone close to you, it is important that you endeavour to pay them back in full and on time. Loaning from someone who cares about you might make it easier to miss a payment thinking ‘they will understand’. However, money can ruin relationships and it is essential that you handle any loan in a professional manner.
- Borrowing money from a loan shark agency
There are many loan shark agencies who will lend money without doing a credit check or without asking for proof of income. They will generally charge very high interest rates and this could land you in a dangerous situation. It is essential to stay away from loan shark agencies if you can.