Getting an affordable $5,000 personal loan with bad credit can be tricky, but not impossible. Usually, finding the right deal means looking outside the normal lender options. Here are 3 of the best.
Banks are not the most accommodating when an applicant has a very poor credit history, but those that are willing to approve an application tend to have terms that make the deal very expensive. The question then is whether or not it is possible to get a $5,000 personal loan with bad credit that is actually affordable.
The answer is a definite Yes, though it is necessary to look beyond the range of traditional lenders and towards a set of alternative loan sources. Some of the options offer a veritable guarantee of loan approval despite bad credit, making it possible to deal more efficiently with financial emergencies, while others offer better terms that make the loan easier to repay.
And while a $5,000 loan may not seem enough to warrant a dedicated search, remember that every personal loan must be repaid, so every little saving that can be made counts. So, what are the best alternative loan sources worth considering?
1. For Emergencies
Financial emergencies can often be the final straw, upending any progress that is being made and throwing budgets into chaos. But if it is possible to get a $5,000 personal loan with bad credit quickly, then it should be possible to deal with such problems.
There are two issues that applicants prioritize. Firstly, that approval is practically guaranteed, and secondly that the loan cash can be accessed fast. A payday loan satisfies both of these conditions. Because they are granted against an upcoming paycheck, approval despite bad credit is almost certain. And, because approval is granted within minutes, the cash can be deposited within just 4 hours.
There is a catch though, with the payday loan one of the most expensive loan options in the market. Interest can be as high as 30% while the repayment term is often just 30 days. Loan limits are usually $1,500, so a 3-month deal is often offered. As personal loans go, this is a very expensive option.
2. Best Repayment Terms
If the expense of a $5,000 loan is the issue, then a family loan is the best option. These are loans that are secured through family members, like a parent or sibling, and when seeking a $5,000 personal loan with bad credit it is virtually impossible to get better repayment terms.
The reason is that family rarely charge interest, and if they do it is by far a lower amount than a traditional lender would. What is more, securing loan approval despite bad credit is practically guaranteed. The only condition is that the particular family member actually has $5,000 to hand to lend.
A third advantage is that the repayment schedule is usually quite easy to renegotiate, with family members understandably willing to be flexible. However, be aware that it is still necessary to have arrangements clear. So write the terms of the personal loan down to save confusion.
3. Most Structured Option
When a loan is secured from your family, the onus on repayment is still on the borrower. But with the relaxed structure of the loan, issues with repayment reliability can arise. But there is another option that sidesteps that problem. When seeking a $5,000 personal loan with bad credit, your employer may be willing to help.
Known as company loans, your employer lends the funds needed. Approval despite bad credit is certain because they are the source of your income, and so repayments are simply deducted from the monthly pay. Interest will be charged too, but it is usually a very competitive rate.
However, one negative with securing this kind of personal loan is that approval may not be fast, especially if an employee credit union or lending scheme does not officially exist.