Sometimes, you need a loan due to an unexpected event such as a bill higher than you had initially planned or a family emergency. Getting a loan can provide a lifeline and help you meet your financial obligations. However, it is challenging to get a loan with bad credit as lenders are hesitant to take a risk that you might not pay the loan back. Borrowers with bad credit can get loans through other means, although the amounts they can borrow are limited.
Some lenders have less stringent standards for borrowers, and others use alternative data when evaluating applications. These lenders tend to consider factors such as utility bills and other account information. It is important to bear in mind that lenders that cater to borrowers with poor credit ratings tend to impose higher interest rates.
Who Needs a $400 Loan?
There’s no shame in needing some funds, and millions of Americans find themselves in such situations. For example, if your utility has been cut, the refrigerator is empty or you need to cover an urgent health care expense, you may need to get a loan. At times, a small loan is all you need to cover your children’s back-to-school items.
Where Can You Get a $400 Loan?
You can find several ways to get a loan, and the method you end up with depends on your credit score as well as your relationship with financial institutions. Below, Benzinga provides a list of traditional ways you can obtain a $400 loan.
Personal loans: Don’t count yourself out of a personal loan if you have bad credit. Some lenders offer personal loans to borrowers. These lenders may charge higher rates of interest up to 35.99%, but a rate in that range is much lower than payday loans. You are also more likely to be able to make the payments without hurting your bottom line over the long run.
The interest rate on personal loans tends to be fixed, which means you know exactly how much you will be paying over time. A constant rate allows you to plan effectively and ensure that the additional loan does not negatively impact your credit score.
Credit union: Only 36.2% of Americans are members of credit unions, which means only 3 in 10 people can borrow from a credit union. If you are a member of a credit union, you are considered to be a member-owner. A credit union tends to be more flexible with its owners, especially if you have been a member for a while. You may be able to get a $400 loan from your credit union.
Payday loan: Payday lenders are legal in 37 states, and in those states, these lenders have many physical locations. If you are looking for a small loan and you do not have a good credit rating, you can borrow from a payday lender, although it will be at a very high-interest rate. It is a fairly straightforward process, but it can add an extra financial burden on your finances as the interest rates are some of the highest across the country.
Bank: You may be able to get a small loan from your local bank as it has all your financial information on past payments as well as information on past overdrafts. Furthermore, banks have vital information about your earnings, both income and dividends. This knowledge enables a bank to give you a loan that is proportional to your total income.
How to Get Approved for a $400 Loan
In order to get a $400 loan, it helps to have a good credit score. Your credit score is computed by how and when you meet your financial engagements. If you have not missed payments, you will be able to get a loan at a lower rate of interest. As such, it is important to pay your bills on time and ensure that you are not overdrawn on your account to benefit from low-interest loans at market rates. It is important to find a lender that meets your needs without charging interest rates that are too high.
In order to apply for a $400 loan, you are required to have personal identification such as a driver’s license, a social security card or a passport. The lender will probably ask for your employer’s information and proof of residence including a utility bill or a lease agreement.
Credit score: Most lenders in the U.S., including online lenders that consider alternative credit data, run a credit check to gauge your ability to repay your loan. Most of the best and more affordable personal loans require you to have a fair credit rating, while a good or excellent score increases your chances of having your loan approved.
In the event that you find mistakes in your credit score, you can contact some of the major credit rating agencies such as Equifax (NYSE: EFX), TransUnion (NYSE: TRU) and Experian (OTCMKTS: EXPGY) to correct your score. If your credit score is low due to other reasons, you may still have a chance to get a loan. However, the interest charged on such loans may be high, so you may want to take a few steps to improve your credit rating before applying for a loan from a lender. Some financial platforms, such as MoneyLion (NYSE: ML), can lend you money while ensuring that you improve your credit rating over time.
Keep Safety in Mind When Taking out a Loan
If you need a loan, it is preferable to use trustworthy, innovative, transparent services that improve your score over the long run. Check out Benzinga for more information on how to improve your credit score and get your finances back on track.
Frequently Asked Questions
Where can I borrow money ASAP?
The answer depends on the amount and the nature of the loan. It may be easy to get a payday loan, but doing so is expensive and risky. However, you can use MoneyLion to get a loan, monitor your expenses and keep up with your payments. This financial platform helps you work toward a better credit score over time, which will reduce the interest you pay on future loans.
Can you get a $400 loan from a bank?
Traditionally, banks lend to individuals who want to make large purchases such as houses or cars. However, you can get a $400 loan from the bank if you have a good credit score and pay your financial obligations on time.
Can I get a $400 loan with bad credit?
Getting a $400 loan with bad credit may be difficult as traditional lenders tend to have stricter requirements. However, there are alternative lenders or online lending platforms that specialize in providing loans to individuals with bad credit, so it may be possible to find options that suit your needs.
About Henri Kouam
Henri Kouam is an economist and machine learning enthusiast. He currently builds Machine Learning models to help clients across Europe forecast a range of asset classes such as cryptocurrencies while working with, the Nkafu Policy Institute, an African-based think tank to help inform economic policy. He equally works as a consultant for NY-based ”Global Wonks”, where he has named wonk of the week twice due to his actionable intelligence on North America.