In the United States, more people than ever before are living paycheck to paycheck. Unfortunately, over the last 30 years, wages simply haven’t kept up with the increases in living expenses, including housing and transportation costs. Even though the official statistics indicate that unemployment is hovering near all-time lows, this fails to consider that many of the best jobs of 20 years ago have been replaced with minimum-wage, part-time work. This has left tens of millions of Americans in a financially precarious situation.
Reports suggest the majority of Americans cannot afford a $500 emergency expense without borrowing money. It is, therefore, important to understand what options one has when faced with a short-term cash crisis. Another unfortunate consequence of financial insecurity is that people with no savings usually also suffer from bad credit. This can make drumming up needed money in the event of an emergency a challenge.
Short-term borrowing
There are, however, a number of options to raise the money needed to bridge short-term gaps in one’s personal finances. One of the most commonly used options is going with an installment loan, an alternative to payday loans with more transparent terms. Although any loan that is paid back according to an amortization schedule is technically an installment loan, the term is usually used to refer to a type of consumer loan that provides an alternative to other forms of quick borrowing options.
Many of these loans are available through online providers, making the application process and getting the cash into the borrower’s possession incredibly easy. Every installment lender has slightly different lending standards, loan terms and fee and interest structures. The best way to find a loan that fits your needs is to hop online and start searching through the many available options.
While most installment lenders will require some form of proof of assets, income or a minimally decent credit score, those with bad credit can still find many lenders that will work with them to structure a loan to their needs. As a general rule, however, those with the worst credit scores should expect to pay higher fees and interest.
Alternatives to borrowing
Some people may still be hesitant to borrow any money from a lending company or bank. Although it is unlikely that any individual will get into long-term financial trouble when following responsible borrowing rules, all too often, people find themselves unable to manage the temptations presented by access to easy credit. On top of this, even with responsible borrowing, the fees and interest associated with short-term loans can really add up.
For those with bad credit who don’t want to deal with the hassles and expense of borrowing from a company, side hustle income can provide a short-term means of making up for a momentary lack of funds. The good news is that, today, it is easier than ever for people to earn a little extra income. Through innovations like gig economies, anyone with a car can turn their free time into $20 per hour or more. There are also many online services through which people with certain skill sets can make money without ever leaving their home.
Another alternative to commercially available loans is borrowing money from family members. The benefits and risks of raising short-term funds through this method vary widely, so it’s always best to carefully consider whether your situation, including the temperament and reliability of your family members, make the risks worth it.
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