It is normal to associate loans with banks. But there are more than banks lending to the public, and when it comes to seeking a $5,000 personal loan with bad credit, there are a number of alternatives worth considering.
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The truth is that when it comes to seeking loan approval, banks are infamously reluctant to approve loans that are applied for by people with low credit scores. The reason is that they see the deal as being risky, but there are millions of people who have been due to the economic problems of recent years.
What this means is that the risks are not as great as it might seem, a fact that has led alternative lending sources to offering very good personal loan deals. There are several alternative sources, and here are just a few of them.
The Online Lender
Online lenders already have a reputation for providing the best loan deals to the consumer, with interest rates that are low, repayment schedules that are flexible and approval chances that are high. In fact, seeking a $5,000 personal loan with bad credit is more easily accommodated online than it is with traditional lenders. Online lenders specialize in loans designed for bad credit borrowers.
There are several advantages to getting loan approval from an online lender, especially loans as large a $5,000. But a great attraction to the online lender is the low rate of interest that is typically. They are not necessarily rock bottom, but are lower than banks would charge. This is mainly because they have less overheads and a vastly greater market size.
Of course, there are criteria, and applicants must show that they have reliable employment and a large enough income. What is more, an employment history of a minimum of 6 months should be proven, and for a current bank account before a personal loan can be approved.
This is a loan source option that is growing in popularity, mainly because there is no approval process, an informal air about the transaction and little chance of any interest being charged. Also, when seeking a $5,000 personal loan with bad credit, the low credit score is meaningless. The only issue is whether a family member has the sum required to give.
Altogether, this is the best loan deal that could be agreed, with no interest rates charged and a repayment schedule that is arguably the most flexible possible. Getting loan approval is practically no problem, since the family of the applicant needs no time to consider trustworthiness.
However, like any kind of financial arrangement, it is a very good idea to agree terms. Writing down these terms is important in order to avoid confusion. What is more, getting those involved to sign a copy means that everything is crystal clear. It is very difficult to see the negatives to a personal loan from a family member.
Loans From Employers
Many people will hesitate approaching their employer for a loan, but this is an option that is logical and viable. Just like a family loan, getting a $5,000 personal loan with bad credit relies on an informal agreement with the terms signed to ensure clarity. Since the employer is also the lender, so repayments are not going to be missed. All that needs to be done is for the repayment to be deducted from the paycheck.
With relation to interest rates, this is one of the things to agree before loan approval can be granted but a lower than usual rate can be negotiated. However, remember too that this kind of personal loan is out of reach of the credit agencies, so credit scores will not be improved.