When you need money for unexpected expenses, you may feel as if you have few options, especially if you have bad credit from previous financial problems. But there are lenders who are willing to help. Borrowing isn't cheap, though, and there are scammers willing to take advantage. This website offers some frequently asked questions and answers about short-term loans that you can pay back on your next payday or in installments over the next few months. There's also information about related things, such as improving your credit score or being refused for a checking account. The recent downturn in the economy has left more people than ever with bad marks on their credit, so you're not alone if you're struggling to get back to where you were a few years ago.
Some general questions are below, and the menu at right lists pages with information on other topics.
Question: They say that with a car title loan, you can still drive your car and you don't have to give them access to your bank account. --Jamika, Texas
Answer: With a car title loan, you hand over your car title as security when the lender gives you the money. If you can't pay the loan back on time, they can take your car. If you need your car to get to work, that's not so good. Both payday loans and car title loans are short-term loans for people with bad credit, but they're both expensive. Make sure you understand the consequences if you can't pay, and check that the lender is licensed in your state. Though you can take out payday loans entirely online, most car title loans need to be done in person, since the lender needs to inspect the car. You can sometimes start a car title loan online, and occasionally do it entirely online. If you have poor credit and need some money quickly, a better choice may be a payday loan or short-term installment loan like this one, which you can apply for quickly online, without needing to give up the title to your car.
Question: I swore I'd never use another credit card, but I travel for work and I need one to make hotel reservations, even though I get reimbursed. What can I do? --Gerry, Atlanta
Answer: Look for a secured credit card. You won't be able to spend more money than you have, so you won't be tempted to go into debt, but you can use it like a regular credit card. It can help repair your credit score, too. When you pay it off each month, your payments will be reported to the major credit bureaus and help show other lenders you can be trusted.
Question: l got laid off, but at least I can move closer to my daughters, since I'm not tied down here. Two companies there are already interested in interviewing me, after weeks of no luck job hunting here. But I need money to move. Can I get a loan and pay it back from my unemployment check or my (hopefully) new job? --Shayne B., Chicagoland for now
Answer: There are a few ways to get loans if you're unemployed, but not many are cheap. If you have friends who can loan you the money or credit cards that you can use, those are probably the least expensive choices. If you have life insurance with cash value, you could try borrowing against it, but lenders may be cautious. Some payday loan places will also offer short-term loans based on a steady income from unemployment checks.
Question: I know that payday loans are illegal in some states. What about installment loans? Are they the same thing? Are they legal in Ohio? --MacG, Chillicothe
Answer: Installment loans are short-term loans, usually lasting a few months. Like payday loans, they're often available to people with unestablished or poor credit.
With a payday loan, you're required to pay all the money plus the fee back on the next payday. With an installment loan, you agree to make several payments, every payday or once a month, and at the end of the agreed-on time, you'll have paid back the loan and interest.
Laws change, but Ohio is one of the states where installment loans are currently offered as an alternative to payday loans, as of this writing.
Question: I need a laptop for college, but I can't afford to pay for one all at once. By the time I pay it off, it'll probably be outdated and I'll need something else. Is there a way to rent it without being stuck buying it? --Katy, Carmel, In.
Answer: You can rent-to-own a laptop the same as furniture or a TV at a rent-to-own store. If you can't or don't want to make payments, you can simply return it. Rent-to-own costs more in the long run, though, so even though it's a way to get things quickly with no major upfront expense, it costs more than purchasing outright if you think you'll eventually want to own the item.
Question: I see "no-Teletrack" loans advertised. What does it mean? --G.B.L., Wisc.
Answer: Teletrack is a credit reporting agency that specializes in recording your activity when you take out a payday loan, buy furniture or a used car at a buy-here-pay-here place, do business with a rent-to-own store, and similar transactions. You have a credit report there, just like at the big three credit reporting agencies. People who have a poor Teletrack report, due to defaulting on those kinds of loans, can get "no Teletrack loans," since the company doesn't check a person's Teletrack report. They may be more expensive, though, and the lender may also look at other reports, such as records of banking problems or checks written with insufficient funds.
Question: I'm trying to pay off three payday loans with extended payment plans, but I don't want to get into that again. I want to build up an emergency fund, but for now I'm always cutting it close when it comes to paying rent and utility bills. I hate living like this. What can I do when I need money, so I don't get caught in the payday loan trap again? --Ebayprincess, Kentucky
Answer: As soon as you get the loans paid off, you can pay yourself by putting the money in an emergency fund each month and use that if you need money unexpectedly before payday. But you already know that! What can you do now? If you need help with rent or utilities, look into programs you may qualify for that are set up to provide monetary help to low-income people in need. Check with your state's LIHEAPoffice for information on help with heating and cooling costs. See if you're eligible for food stamps (Supplemental Nutrition Assistant Program or SNAP) by contacting your local office or applying online.
Question: The check I gave a payday loan place bounced. I needed to take the money out of my account for something else. I'm still planning to pay them back, but now they say the cops are coming to arrest me for writing a bad check. Am I really going to jail? --Janet, Phoenix, AZ
Answer: Debt collectors try to scare or threaten people, but in many states, there are laws specifically forbidding you from being criminally prosecuted if the check you gave to a payday loan place bounces. They can still sue you in civil court to get the money back, but unless you actually tried to defraud them, there's little chance you'll go to jail simply because the check bounced.
Question: I heard that a secured loan is a possibility for someone whose credit isn't all that good. Is that true? --Bobby R., North Dakota
Answer: Lenders are more comfortable giving a loan if they can get something of value to hold as "security" until you pay back the loan, so yes, someone with bad credit may find it easier to get a secured loan, compared to an unsecured loan like a credit card. There are many kinds of secured loans, ranging from relatively cheap, such as HELOCs, to expensive, such as pawn shops.
Question: I'm behind on my credit card payments. They're threatening to garnish my wages. Can they do that? --Willow, Tampa, FL
Answer: In Florida, if you're a head of household providing at least half the support of someone else, such as a child, spouse or parent, you can file for an exemption that will stop a credit card company from garnishing your wages. Before they can even start the process, they'll need to win a judgment in court for the amount due, then you'll receive a notice of garnishment (click here to read the Florida law). At that point, you have to act within 20 days, but you can request a hearing and an exemption, if you can prove you qualify. I'm not a lawyer, so contact a local lawyer for specific advice.
Question: I need to get a bank account, but they turn me down. They say it's because of Chexsystems. How can I get my name out? --Kylie R., Michigan
Answer: Unfortunately, if the information is accurate, you can't, at least not permanently, if the information was reported within the last five years. It automatically ages off after five years. If you dispute information, Chexsystems may remove it temporarily so it may not be visible to a new bank who looks at your report during that time, but Chexsystems will return it to your report if they confirm that the information is correct. The only other possibility is if you're lucky enough to catch the bank who reported the error, in a violation of some technicality of the Fair Credit Reporting Act, and sue them in small claims court, or threaten to sue them to get the information removed. Companies with lawyers who specialize in credit report violations know what kinds of minor violations to look for.