It’s not exactly a secret that the majority of Americans struggle to set aside money in their savings accounts. As a result, less than 40 percent of people have enough money on hand at any given moment to cover the cost of a $1,000 emergency.
Do you fall into this category? If so, you might find yourself stuck between a rock and a hard place the next time you need $1,000 in a hurry. You might not think you have any options for finding $1,000 fast, especially if you don’t have great credit.
But there is one potential option for you: Income based loans. These loans are a godsend for those Americans who need to get their hands on money. You can use one to pay for a surprise car repair bill or to make an emergency home repair.
Read more about income based loans below.
First, What Is an Income Based Loan?
Before we talk about the different income based loans that you can apply for, it’s important for you to have a firm understanding of what income based loans are. These loans are personal loans that are designed to help those with less-than-perfect credit.
When you obtain an income based loan from a lender, they’ll use your income to decide how much money you qualify to borrow. Your income will let a lender know how much money they can expect you to be able to pay back in a reasonable amount of time.
There are many advantages of using these loans over other loan options. Some of the biggest benefits are:
• You can often take up to 18 months to pay this type of loan back
• You can get access to a competitive interest rate with this type of loan based on your current income
• You can make easy monthly payments to satisfy the repayment terms of your loan
Now that you know a little bit more about income based loans, let’s check out the three best loans that are available to you right now.
1. Secured Income Based Loans
Do you own a home, a car, a boat, or another piece of property that is worth a decent amount of money? Then you might be interested in taking out what is called a secured income based loan.
When you apply for a secured loan, you’ll be asked to put up something of value as collateral in exchange for the money that you’ll be borrowing. Most lenders will accept just about anything as collateral as long as it’s worth something.
From there, it’ll be up to you to pay back your loan based on the payment schedule that you set up with your lender. If you fail to do this, the lender will be able to take whatever it is that you put up as collateral from you and sell it so that they get their money back.
The great thing about a secured loan is that it shows a lender that you’re serious about paying them back. They won’t be too nervous about you skipping out on payments, which will allow them to offer you a better interest rate than they might otherwise.
But of course, you need to be prepared to pay back an income based loan to avoid losing whatever you put up as collateral. It’s good to have a payment plan in place prior to agreeing to take out a secured loan of any kind.
2. Unsecured Income Based Loans
Do you feel uncomfortable with the idea of putting up your home, your car, your boat, or another personal possession as collateral when taking out a loan? You may want to shy away from secured income based loans.
There is a better option for you. It’s called an unsecured loan and it doesn’t require you to put up anything as collateral when you apply for it. You won’t have to stress out over potentially losing your house, car, or boat with this type of loan.
That being said, there are a few things to keep in mind when you take out an unsecured loan. Namely, you need to realize that lenders will often see you as a bigger risk than someone applying for an unsecured loan.
This means that you might get a loan with a higher interest rate. It might make you rethink your decision not to take out a secured income based loan.
3. Income Based Loans with No Credit Check
Do you have bad credit? Like, extra bad credit?
You might not think that you can qualify for income based loans if this is the case. But the truth is that you can—as long as you look for loans with no credit check.
Lenders won’t even bother taking the time to check your credit when you apply for this type of loan. They’ll extend a loan offer to you based on little more than your income and the basic information you have provided for them.
Much like with unsecured loans, you may face higher interest rates when you apply for a loan with no credit check. Lenders will calculate your interest rate differently since they’ll see you as a risky borrower.
But if you don’t have a good credit score, it’s nice to know that you have this option. It can come in handy for those who don’t know where else to turn for a loan.
Apply for an Income Based Loan Today
If you just found out you need to make a major repair to your vehicle or home, don’t put off doing it because you don’t have money in your savings account. Income based loans are lifesavers for those in serious need of money.
Consider all three of the loan types that we just mentioned. Pick the one that will work best for you based on your income, your credit history, and the situation that you find yourself in at the moment.
Poke around on our blog to find other articles on improving your financial future.
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