“Uh-Oh, I Need Money Now!” 4 Fast Cash Options for People With Bad Credit
There’s no perfect way to get money fast when you have bad credit, but these four choices can all be a good solution—so long as you’re careful.
Realizing that you need cash and need it yesterday is never a fun thought to have. But when surprise expenses or a financial emergency rear their ugly heads, that thought just might sum up your situation. Having an emergency fund for times like these is always the best way to go, but for folks who don’t have one, going on and on about the benefits of saving money isn’t going to help in the slightest.
Instead, you need some fast cash options that are going to help you right now—but that won’t leave your finances hurting in the long-term. And if you have bad credit, that second part can be a very tough ask. Getting the money is easy enough; escaping a predatory cycle of debt is much harder. This doesn’t mean that you can’t get the money you need, it just means that you’ll have to be careful when making your decision.
Here are four ways that you can get fast cash when you need it most. None of these options are perfect—and some are certainly riskier than others—but each of them can be useful in a pinch. No matter which option you choose, make sure you understand all the risks before signing up. Your future self, the one who has to live with consequences of the decision, will thank you.
1. Borrowing money from friends and family.
Look, nobody likes going to their friends and family, hat in hand, and asking for money. Even if they are more than happy to loan you the funds you need, it can still feel really embarrassing. And if they’re less than happy to loan you the money, well, then it feels a whole lot worse.
Still, this is your best option if you need fast cash. For one thing, friends and family are much less likely to charge you interest, which essentially means you’re borrowing that money for free. Plus, they are much more likely to be understanding if your repayment schedule is a little erratic—something that regular lenders tend not to be.
Borrowing money from friends and family, however, does come with some significant downsides. Screwing up your credit is one thing; screwing up your close relationships is something else entirely. Plus, there are lots of people whose friends and family members don’t have any more spare cash than they do, which makes this option a non-starter.
If you’re going to borrowing money in this fashion, make sure that both parties are crystal clear on the terms of the loan. You might even want to draw up your own loan agreement so that you both have something in writing. For a sample contract, and to learn more about this kind of casual borrowing, check out our blog post: How to Ask Friends and Family For Money.
2. Selling or pawning your stuff.
There are two ways that you can do this: You can outright sell your stuff, or you can pawn it with the plan to eventually get it back. Both of these options can be totally fine ways to get some extra cash, though they both have their risks and their downsides.
In order to sell your stuff, you’re probably going to have to do it online. That means using Craigslist, eBay, Facebook, or any one of numerous apps. There’s a lot of set-up involved when it comes to selling stuff online, which is time that you might not have available to spend. Plus, meeting with strangers from the internet is always a risky proposition.
For the most part, you aren’t going to sell your stuff for anywhere near what it’s really worth. And if you wait around for someone who’s willing to pay up, well, you need cash now, not later, right? And the more you are able to sell an item for, the more likely it is to be something you really don’t want to be selling.
Not getting full value will also come into play when you are pawning something. Plus, you’ll have to pay interest in order to get your item back. While most pawn shop loans are only a month-long, many of them will let you extend for several months at least. That means even more interest piling up.
If pawn shop loans had really low interest rates, this wouldn’t be so much of a problem. But they do. Pawn shop loans can have an average rate anywhere from 15 to 275 percent depending on the laws in your state. Yikes! To read more about pawning your valuables for some quick cash, head on over to our blog post: The Pros and Cons of Pawn Shop Cash Advances.
3. Take out a cash advance on your credit card.
Now, if you need emergency money and it doesn’t matter if it’s cash or not, then you can put the balance on your credit card. But this only applies if you already have a credit card with a low outstanding balance. Generally, you want to keep your credit card balances below thirty percent, but when an emergency strikes, you might not have any better options available.
If you don’t already have a credit card, however, then a poor credit score is going to limit your options for getting one. You might only be able to apply for a secured credit card, but that will require a cash deposit to set your credit limit, putting you right back where you started. Besides, it can take that card awhile to arrive, and by then it might be too late.
For emergency expenses that require cash, taking out a cash advance on your credit card might be your best bet. That doesn’t mean it doesn’t carry significant risks to your financial health, it just might be the least-bad option you have.
Credit card cash advances work a lot like using your debit card to get cash from an ATM. The main difference is that cash you get on a debit card is money you already have in your bank account, whereas a credit card cash advance is money that you’re borrowing. When you get an advance on your credit card, the amount you withdraw is then added your outstanding balance, just like when you use your card to make a purchase.
The biggest downside to credit card cash advances is that they are more expensive than regular credit card purchases. They come with an upfront fee just for making the transaction that averages $10 or 5 percent of the amount withdrawn, whichever is higher. The APRs for cash advances are also much higher than the APRs for regular transactions, and the lack of a 30-day grace period means that interest starts accruing immediately.
Lastly, there limits on credit card cash advances that, depending on the card, might be lower than the amount you need. These might be limits on the amount that you can withdraw per day or per transaction; your card also likely has an overall limit for cash advances. Even if a credit card cash advance is the best of your bad options, they’re still putting your finances at risk.
4. Shop around for the right bad credit loan.
When you have bad credit, you are likely going to be locked out of loans from traditional lenders. When they look at your credit score, what they see is a high likelihood that you won’t be able to pay them back. Instead, you will have to take out a bad credit loan that will come with much higher interest rates.
Still, some bad credit loans can be a great financial solution! So long as you can afford your payments, a higher interest rate can be an acceptable price to pay for access to credit you wouldn’t otherwise have. It’s all about finding the right bad credit loan and making sure you steer clear of the wrong ones.
There are three main types of bad credit loans out there, two of which should be avoided at pretty much all costs. payday loans and title loans risk trapping you in a predatory cycle of debt, while certain bad credit installment loans can actually help you improve your overall financial health.
Payday loans are a very common kind of short-term, small-dollar loan aimed at people with bad credit. They’re rarely larger than a few hundred dollars and are designed as an advance on the borrower’s next paycheck. The loan is often due on the customer’s next payday—that’s where the name comes from.
The average term for a payday loan is only two weeks, and the average interest charge for one of these loans is around $15 per $100 borrowed. That might seem like a reasonable cost, but it actually works out to an APR of 391 percent. Paying 15 percent to borrow money for only two weeks makes these loans much more expensive than standard personal loans.
The trouble with payday loans, however, isn’t just their cost; it’s the size of their payments. Payday loans are designed to be back in a single lump sum (principal plus interest) that can be very difficult for many people to afford. Only two weeks to pay back several hundred dollars can be tough when you don’t make that much money.
Trouble making those payments leads to some payday loan customers rolling over their loans, paying off the interest and getting an extension on their due date with even more interest added on. Customers can also reborrow their payday loans—paying off the original loan and then immediately taking out a new one to cover their other bills.
All of this can add up to a cycle of debt wherein the customer is trapped paying more and more interest on their loans without ever getting closer to paying off the loan itself or getting their finances stable enough where they don’t need a loan at all. Payday loans might seem like a good fit for short-term financial needs, but too often they end up presenting a long-term problem.
Title loans are another type of short-term no credit check loan, and they might even be more dangerous than payday loans. These loans get their name from the thing that they use as collateral: the title to borrower’s car, truck, or motor vehicle.
Since these loans use the borrower’s car as collateral, customers are often able to borrow more with a title loan than they could with a payday loan. But most title lenders will still lend their customers only a fraction of their vehicle’s true value. And if the person can’t pay it back, then the lender can repossess their car and sell it.
So how affordable are title loans? Well, Your average title loan has a repayment term of one month, and a monthly interest rate of 25 percent. Some quick math reveals that a 25 percent monthly rate adds up to an APR of 300 percent! Like payday loans, many title loan borrowers end up rolling over their title loan again and again, racking up thousands of dollars in fees and interest.
In the end, title loans don’t just put your finances at risk, they could endanger your very livelihood. Lots of folks out there need their cars in order to get to work, so having their car repossessed could very well lead to them getting fired. And according to the Consumer Financial Protection Bureau, one in five title loans ends in repossession. That number and those interest rates are much too high for a title loans to be a viable option.
Installment loans work a lot like regular personal loans. They are designed to be paid back in a series of regularly scheduled payments over a period of months or years. This gives them a leg up on payday and title loans, whose lump-sum payments make them far more difficult to pay back on time.
The main difference between regular loans and bad credit installment loans is the interest rates. And while these bad credit loans have much higher interest rates than regular loans, there are many installment lenders (like OppLoans) whose rates are much lower than the average payday or title lender.
What’s more, most installment loans are amortizing, which means that every payment you make goes towards both the principal and the interest. And since interest accrues on these loans over time—instead of being charged as a flat fee per loan period—paying your loan off early will save you money!
Overall, a long-term installment loan is a much better option than a short-term payday or title loan. Their payments are often more affordable, their principals are higher, and they let you save money by paying ahead of schedule. Plus, some installment lenders report payment information to the credit bureaus. That means that paying your loan back on-time could help your credit score!
But don’t let the relative security of an installment loan lull you into a sense of false security: You still have to make sure to do your research. There are a lot of untrustworthy lenders out their offering bad credit installment loans. Check out customer reviews and the lender’s BBB page, compare rates between lenders, and don’t sign anything before you fully understand the terms and conditions.
The best way to deal with emergency expenses is to already have money set aside. A well-stocked emergency fund will give you an interest-free solution to any surprise bills that come your way. But saving money is hard, especially if you’re living paycheck to paycheck. If you need fast cash, there are always solutions out there. It’s just about finding the one that’s right for you.
To learn more about living life with a bad credit score, check out these related posts and articles from OppLoans:
- Can You Have Bad Credit Even With a Good Income?
- How to Survive in a Banking Desert
- How Bad Credit Can Affect Your Utilities