Alternatives to Quick Loans for People with Bad Credit
If you live within Canada and your bank or credit union has said no to your request for a loan because you don't qualify right now, you might, in fact, have other options that have the potential to resolve your debt issues, restore your credit, and set your finances back on a firm footing.
The first question you need to ask yourself right now is "Why?" Why do you really need to get this loan? What's pushing you in this direction? Take a minute to click on your answer below and find out if some better choices may be available to you.
- This is for an emergency. Your car broke down, you have a big dentist bill, your dog is sick, you need to travel to visit a sick relative, or something else along these lines.
- You are trying to rebuild your credit or improve your credit score.
- You would like to have just one loan with one payment. You’re trying to get a more affordable payment by paying off your debt over a longer period of time, or your existing interest rates are too high.
1. Need Money for an Emergency
If you really need some money right now to deal with an actual emergency because you haven't saved anything to handle emergencies, then you might need to continue on with your search and see if you can find a loan company that is able to help you. You should know, though, that if you have bad credit, you'll likely be looking at an interest rate of close to 47%. However, you might be able to qualify for something better if your credit doesn't look too bad. Learn more, find out how to keep from getting ripped off, and see some other ideas.
2. Want to Restore or Improve Your Credit Score
You might be looking to apply for a loan because someone told you that's how you can improve your credit score. While this advice may help you over the course of many years, if you have bad credit, it's no longer about saving your credit. It's now about rebuilding your credit. To make this happen as quickly and effectively as possible, your best bet is to speak with a non-profit Credit Counsellor near you.
You can meet with a Credit Counsellor in person or over the phone. They can go over your whole financial picture with you, answer a number of your credit related questions, and carefully help you craft a plan to restore your credit rating. You'll learn which particular steps you should take to help you reach your short-term and long-term financial goals. Appointments with non-profit Credit Counsellors are typically free and are always strictly confidential.
You can actually get a jump start on increasing your credit score by implementing the recommendations in our How to Restore Your Credit Guide.
3. Want a Monthly Payment You Can Afford
Before we go further, there are some more questions you need to honestly ask yourself. Is a loan truly the best thing for your situation? Is it really what you need, and will it actually help? Are you dealing with your situation, or are you just extending the pain? Is it possible that a loan will only be a short term solution to a longer term problem that’s been brewing? Have you considered the possibility that a bad credit loan could increase your cost of living, put you further behind the eight ball with high interest payments you can barely afford, and hurt you?
Don't be too hasty to go for something that has the potential to hurt your finances and possibly cause you more harm than good. You need to know your options. Look for advice from someone who isn't interested in selling you a loan - someone who is well-informed about how to turn around a bad credit situation.
The key thing you need to do is resolve the core issue that's causing financial challenges. Finding the cure is critical. Don't just keep prolonging your pain.
The first step you take should be to sit down with a local, not for profit Credit Counsellor. They'll carefully examine your complete financial situation for you, help you make a spending plan (budget), and help you make sense of all your options so you can create a plan to get your finances back on track as quickly as possible. When dealing with circumstances like this, you can never say, "one size fits all." Every person's situation has it's own distinct aspects. That's one reason why it's so valuable to meet with a real expert to look over your situation to find out what possibilities may be available to you.
An Alternative Few Know About for People with Bad Credit to Obtain Something Like an Unsecured Personal Loan
Even though there are a fair number of ways to assist people with bad credit in tackling and dealing with their situation, a nice option a fair number Canadians don't really know about is a Debt Management Program.
If you decide you would like to put your debt onto a Debt Management Program, the credit counselling organization you're working with will communicate with your creditors and make arrangements for your unsecured debts to be placed on the repayment plan (while it's not actually a personal consolidation loan, it essentially achieves the same sort of thing). All of your payments on these debts are brought together into a single affordable monthly payment, and the interest you were paying is either removed or dramatically cut back. If you also have any secured debt, your Credit Counsellor will incorporate any payments for that debt into your program so that you'll be able to afford your payments every month.
The average program lasts 2.5 years (the maximum length is 5 years), and the credit counselling agency can work with you to rebuild your credit once you've finished the program. Some credit counselling organizations even have a credit rebuilding program available in the back end of the repayment program that you can choose to take advantage of if you wish to.
What to Do if You’re Really Struggling with Debt in Canada
If you’re having a hard time with your personal debt and could use some help, don’t making things more painful by prolonging the pain with a bad credit loan. Take the time today to speak with a good non-profit credit counselling agency, find out what you don't know, and use their help to put together a plan to get your finances back on the right track. Another great thing about non-profits like this is that they typically help people for no charge, and their assistance is completely private and non-judgmental. You really have nothing to lose by speaking to a Credit Counsellor. Their job is simply to help and assist you. Find one near you.