Thanks for your question on hardship loans and getting financial help when you are financially struggling.
If you do not have any collateral, what you seek is a signature loan, also called an unsecured loan or personal loan. Personal loans are risky for lenders due to their lack of security and relatively high default rate. Therefore, lenders charge higher interest rates on personal loans, especially those for people with a checkered credit history.
If you own a home with equity, start by seeing if you can qualify for a refinance loan. Refinancing could offer you the lowest costs, especially when interest rates are low. If you don't own a home, or can't qualify for a refinance loan, then examine the different alternative personal loan products, but pay close attention to the costs and the interest rates involved.
Depending on your financial situation, there may be a few alternatives to a traditional personal loan that could assist you in resolving your debt.
Six Hardship-based Loan Suggestions
First, read the Federal Trade Commission document, "Payday Loans Equal Very Costly Cash: Consumers Urged to Consider the Alternatives." You may not be considering a payday loan (I strongly discourage payday loans), but the FTC's suggestions are sound. I recommend reading the document to determine if any of the suggested alternatives to payday loans will work for you. Payday loans are only good as a very short-term hardship loan, when you are certain you can pay it back right away.
Second, consider a loan from Prosper, which is a peer-to-peer lending and investing company. Current rates from Prosper range from 6.73% APR to 34.59% APR, as of February 2014, depending on how Prosper evaluates your credit.
Third, look at Lending Club, another peer-to-peer lender that may offer you a loan. Lending Club interest rates range from 6.78% to 28.69%, also as of February 2014.
Fourth, if you have a 401(k) account, ask your 401(k) plan administrator if loans are allowed under your plan. A 401k loan can offer good rates and does not incur taxes, if you pay it back as agreed. Not all plans allow loans, or limit loans to certain circumstances. I do not recommend taking a hardship distribution from your 401(k), as opposed to a loan, unless you clearly understand the repayment terms and the potential tax implications.
Fifth, visit the Bills.com Bills.com Loan Resources page to learn more about the loan options available to you.
Sixth, if your credit score is not excellent but is improving, look at unsecured loan options from FreedomPlus. FreedomPlus is a new lender that looks at more than credit scores. It's underwriting considers other data, giving borrowers a chance to express their creditworthiness. Loan terms range from two to five years, with a maximum loan amount of $35,000. Interest rates range from 7.49% to 29.99%, as of February 2014.
What if a Loan is Not Right for You?
Hardship loans are not always the best solution, even if you qualify for one. If you are struggling with debt, check out all your debt relief options, including the services of different professional debt relief provider.
You can learn more about debt settlement, credit counseling, debt consolidation loans and all other forms of debt relief at the Bills.com debt relief hub.
I hope this information helps you Find. Learn & Save.