It would be foolish to think that securing a $5,000 personal loan with bad credit is easy, but it is important that bad credit borrowers not be discouraged. There are options out there, with loan sources that provide a clearer avenue to financial recovery.
Usually, traditional lenders have strict lending policies that work against the bad credit borrower. But by approaching the problem from a different angle, and identifying the less obvious avenues, it is possible to ensure loan approval despite bad credit scores.
What should be remembered, however, is that the size of the loan requested has an impact too – even when approaching alternative lenders. While a large sum like $20,000 may be out of reach, getting a $5,000 personal loan is not. But what options are out there? And which ones are more likely to end with approval? Here are 3 of them
1. The Family Option
One of the more popular alternative sources for a loan is a family member. This can even be considered a wise move when seeking a modest sum, like a $5,000 personal loan, with bad credit. This is because the pressure to repay is low and the chances of approval are far better than with a regular lender.
Also, families tend to be supportive of each other, which means the costs involved in repaying a loan are minimized and the repayment schedule is made flexible. In most cases, interest is not charged, and because credit history is ignored, approval despite bad credit is assured.
The only issue is whether the family member has the lump sum the borrower needs. This is usually not a problem when seeking a $5,000 personal loan, but larger sums – for example $20,000 – is a different matter.
2. The Student Option
This option is only relevant when the applicant is a student, but it is worth noting that the loan funds do not always have to used for student fees. Many lenders offer student loans that are designed to help in meeting living expenses, and for those seeking a $5,000 personal loan with bad credit, student terms are ideal.
In most cases, these loans only need to be repaid after graduation, with loan consolidation a common option at that time to help make the task of repaying all student finances more affordable. What is more, as a student, getting loan approval despite bad credit ratings is normal.
The best place to start when choosing this option is at your Financial Aid advisor on campus. The complete range of loan options can be detailed there, and it may be possible to qualify for a federal loan that is even easier to repay. Still, a $5,000 personal loan will do wonders for your financial situation.
3. Approaching Online Lenders
There is no secret that online lenders offer the best loan terms, with lower interest rates and more flexible repayment schedules. So, when applying for a $5,000 personal loan with bad credit, it is hard to see any problems that might crop up.
As with all loans, securing approval despite bad credit really comes down to providing affordability and convincing the lender that repayments will be made on time without any problems. To that extent, being full-time employed is a key part of the approval conditions, while a reliable income is another.
However, online lenders do offer the fastest loan approval procedures, ensuring funds can be secured as soon as 24 hours after first submitting the application for the $5,000 personal loan. And with repayments stretched over 7 years instead of 3, the repayment sum is kept affordable.