People come to me with all sorts of financial emergencies. Some need money for higher education, whereas some need money for their daughter’s wedding. Many others need money to start a small business. But whatever the situation, money is something everyone needs.
Whether you’re running a small eatery in Chicago or a dry cleaner’s on the outskirts of New York, you need cash to infuse into your business. If you’ve lost your job recently or have a poor credit score, then you’re looking for loans to get rid of debt and improve your credit score.
Debt is something all of us are worried about and don’t wish to be saddled with. But this four-letter word somehow seeps into our life, causing havoc and sleepless nights. That is when people come to me for help with financial planning.
Consider Short Term Loans
My first advice to people is to look for short term loans. Instead of going in for a long haul, it is better to finish off small loans like credit card dues and so on. If you have a student loan, an auto loan, and credit card dues (these three are familiar to most of us), I advise people to finish off their auto loan first. This way, your credit score improves to some extent.
The next best thing is to go in for debt consolidation. Here the advantages are many. You can bring all your loans under one lender, and the repayment period will be increased to twenty or thirty-odd years, depending upon your age. Your monthly outgoing is reduced, and you can heave a sigh of relief.
Once this is done and you have an income coming out of your small business, you should be looking for a short term loan. For this, you may take a small business loan or a personal loan. But to get all this, the bank will look at your credit score. For those with a poor credit score, banks do not lend, or else they lend at higher interest. Moreover, you have already consolidated your debts. So the next best option is to go in for an asset-based loan. If you own a property, then you can mortgage it to make some money. The next best option is to apply for a car title loan.
What is a car title loan?
This is an asset-based loan where you can get cash over your car, provided your vehicle has a clear title. The lender values your vehicle and extends loan over it. Around 30% to 50% of the car value is extended as a loan. The paperwork is minimal, and you can get cash within an hour.
Even people with bad credit can get a car title loan. Though the interest rate is relatively high, this loan is only for a brief period. Use it as a buffer to finish off your credit card dues and improve your credit score. Once that is done, then you can take a personal loan at a lower interest from a bank and return the car title loan.
If you’ve already consolidated your loans, then deposit the money you receive as a car title loan and get a secured credit card. This will help you to improve your credit score to a great extent. Once this is done, you’re on the road to recovery.
Sarah Waters lives in Los Angeles and blogs about financial news, consumer tips, and car buying advice. Her major areas of expertise are car title loans and auto title loans.