Undisputed financial goals can be set, however unforeseen circumstances could occur in the process. Hence, there are vast financial institutions that now offer hardship loans. Should you get a hardship loan?
As Freedom Debt Relief reviews from customers will attest, hardship loans are designed to help when in financial crisis. Emergency expenses such as medical bills are also covered under a hardship loan.
In this article we will look at whether you should get a hardship loan and why. So, read on!
When Should You Apply for a Hardship Loan?
The best time to apply for a hardship loan is when faced with a financial emergency. What’s considered an emergency may sometimes differ from emergency medical bills, car accidents or job losses. However, all these circumstances could propel you into applying for a hardship loan. Hardship loans can help you settle your debt. Freedom Debt Relief is a reputable debt relief company offering such services.
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Types of Hardships Loans
There are various forms of hardship loans available depending on your situation. Most hardship loans are best known for their low interest rates, short repayment terms and small loan limits. Below are a few types of hardship loans available.
- Unsecured hardships personal loans
- Secured hardship personal loans
- Home equity loans
- 401(k) Hardship Withdrawal
- Payday alternative loans
- Peer to peer loans
Unsecured Hardship Personal Loans
Unsecured hardship personal loans do not require collateral. By assessing your credit score they are able to determine how much you can borrow. One of the advantages of using an unsecured hardships personal loan is that you don’t use your valued items as collateral; the moneylender won’t have to repossess any of your valued belongings if you fail to pay the loan.
Secured Hardship Personal Loans
Secured hardship personal loans require some form of collateral. This makes it easier for those with low credit scores. A secured hardship loan has lower interest rates, larger loan amounts and longer borrowing terms.
Home Equity Loans
Home equity loans are financial aids to help you improve your home but if you have a substantial amount of equity it can be converted into cash when in hopeless times. Home equity loans have a fixed interest rate, which is lower than personal loans. They are long-term loans, which makes it easier to repay.
401(k) Hardship Withdrawal
401(k) is a retirement plan. Depending on the depth of your emergency you can take a short-term loan from it. Borrowing from your retirement can help you avoid interest charges or stretching your credit card debt. There is no need to meet any lenders requirements and there is no need for your credit history to be checked.
Payday Alternative Loans
Payday alternative loans also know as PALs, are short-term loans with low borrowing limits. These types of loans can be used to cover some last minute bills without applying for a loan from a payday lender. It might be more affordable than an unsecured personal loan.
Peer to peer loans are similar to borrowing money from a relative or friend the difference is the lender can be anyone using the peer-to-peer lending platform.
Peer to peer lending are affordable with their low interest rates. The requirements involved are more flexible than with usual loans.
How to Apply for a Hardship Loan
The process utilized in getting a hardship loan depends in the lender. However, there are distinct steps you can follow to help you choose and apply for a hardship loan.
- Get a copy of your credit report
- Knowing your credit score will help you see what loan you can qualify for.
- Check the pre-qualification requirements
- You should take your time to ensure that you meet the requirements of the loan you have selected.
- Compare rates and terms
- Find out which loan is affordable and comfortable for you.
- Submit a loan application
- Submit application forms and other required forms as per lender.
- Finalize your loan
- Before you get approved for the loan your application goes through an underwriting process.
Should you take a hardship loan? When taking a hardship load you should decide primarily based on your situation and your financial objectives. In the article above we have explained extensively on hardship loans. If you do decide to take one, take your time researching and you’ll find the best hardship loan, suited to your situation.