There was a time when banks were the only viable option when seeking a loan, but those days have gone. Today, there are too many alternative lenders offering far superior terms. So, getting a $5,000 personal loan with bad credit no longer needs to be an expensive exercise.
Of course, there is no such thing as guaranteed approval on any loan application, but securing loan approval is not as complicated a task as we are often led to believe. It is not a lucky dip, and if the criteria is met and the right lender is applied to, the chances of getting the green light on the application is quite strong.
Online lenders are willing to ignore the poor credit scores that applicants might have, knowing that many of them are honest borrowers who are victims of the economic crisis. This is why personal loans are offered with very good terms. But what are the alternative loan sources? Here are just three of them.
1. Online Lenders
The most immediately obvious alternative to banks is the online lender. These are generally experts in lending to bad credit borrowers, and operate in that niche market to attract business away from the mainstream lenders. Because of their willingness to accommodate those with bad credit ratings, it is much easier to get a $5,000 personal loan with bad credit from them.
There are numerous benefits to securing loan approval from an online lender. Essentially, the interest rates they charge are lower that those charged by traditional lenders, but they also offer more flexible repayment schedules, often longer in term so that the repayment sum is lower and the loan is more affordable.
The newest generation of online lenders are peer-to-peer lenders, where private members of a site provide a share of the required funds to applicants – perhaps 100 will lend $50, to make up the $5,000 personal loan total. These can also be very affordable, though the application process is quite different.
2. Family Financing
A long-held loan option, this is where a friend or family member provides the funds that are needed. This is obviously a very informal deal, and often there is no interest rate set. As arguably the least expensive loan, this option is ideal when seeking a $5,000 personal loan with bad credit.
The chief issue is whether a family member has the sum required to give. And even if they do, there still needs to be terms agreed between the parties. By securing loan approval with some conditions laid down (and signed), there can be no confusion regarding the repayment schedule and sum.
However, while it may be difficult to see the negatives to this personal loan option, remember that the deal is outside the remit of the lending agencies, and so it will have no effect – either positive or negative – on your credit score.
3. Company-Funded Loans
Loans funded by your employer are another viable source of funds, though few people tend to consider them. But when trying to secure a $5,000 personal loan with bad credit, an employer is perfectly placed to provide the solution. After all, with your income coming from them, your employer is in complete control of the deal.
The chief advantage is that repayments can never be missed because your employer only needs to deduct monthly repayments from your paycheck. And since, the lender is guaranteed to get their money back, securing loan approval is pretty straightforward.
Of course, this kind of personal loan is also out of reach of the credit agencies, so credit scores will not improve either.