It’s an unfortunate fact of life that simple bad luck can strike any one of us at any time. Irrespective of how cleverly you save, or how organised you are, unexpected bills, a sudden redundancy, or wider problems with the economy can all decimate your savings and leave you short. As loathe as you may be to consider it, this might make borrowing your only option, so it pays to understand the choices that are open to you.
One of the most popular forms of borrowing is a secured loan. This works by levying your debt against an asset, such as your home, meaning that if you default on your repayments, your property could be taken in lieu of the money that you owe. As a result, the risk you pose to lenders is greatly reduced, and the terms that you’re offered are likely to be favourable.
However, not everyone is eligible for such an arrangement. Those who don’t own sizeable assets, have too little equity in their property, and so on may find that they have to explore other options. If you find yourself in this position, then here are three alternatives that you might like to try…
#1: Borrowing from Family or Friends
The majority of us are too proud to ask for help when we need it, but one of the lowest risk borrowing options available to you is loaning money from family or friends. Although a lot of us are loathe to make such a request, those who have more than they need are often all too happy to lend it, especially if they know that you’ll pay them back. Thus, if you have people around you that can help out, don’t be too embarrassed to accept their generosity.
#2: Guarantor Loans
When you can’t use your own assets to lower the degree of risk that you pose to lenders, guarantor loans are another option to explore, although they do require a willing friend or family member to shoulder some of the dangers on your behalf. Essentially, they work a little like a secured loan, in the sense that the risk you pose is mitigated by a financial safety net – in this case, a guarantor with a positive credit history, who agrees to accept the debt in your stead should you default on the loan agreement.
#3: Unsecured Personal Loans
Additionally, you might want to explore unsecured personal borrowing options, which are available from companies like Everyday Loans. These do tend to carry slightly higher interest rates than their secured counterparts, yet they don’t require any surety, and can provide you with the funds you need quickly and easily. Provided that you shop around to find the right deal for you, they could be exactly the solution that you’re looking for.
If you’re in need of some financial support, could one of these borrowing options work for you?