Loan To Help Pay Bills

Loans to help pay bills provide short-term funds when you can’t cover essential expenses. These loans include payday loans, cash advances, and personal loans that offer quick access to money when your budget falls short.

You may consider one of these options when an unexpected bill arrives at a bad time or when your income drops and you need fast relief to keep up with utilities, rent, or other essentials. Many people face moments like these, and using a loan can be a practical way to stay on track while you regain control of your finances.

Below, learn which loans may help when you can’t make ends meet.

What Loans Can I Get When I Can’t Make Ends Meet? 

If you’re struggling to make ends meet, you may qualify for unsecured personal loans, car title loans, payday loans, credit card cash advances, or student loans.

• Unsecured loans — Such as payday loans and some personal loans—do not require collateral.
• Secured loans — Secured loans, like mortgages or auto loans, require borrowers to use an asset as collateral. However, they can have more flexible credit requirements.

Below are the most common loan options people use to cover bills or debt payments.

Paying Bills With Personal Loans

A personal installment loan is versatile and can be used for debt consolidation, car repairs, medical expenses, and more. However, personal loans cannot be used for business or commercial purposes. Many are fixed-rate loans, meaning you’ll have predictable monthly payments. A fixed monthly payment amount can make it easier to stick to a budget and avoid financial surprises. You can get a personal loan online or in stores.

Personal installment loans are typically unsecured and do not require collateral. Approval requirements vary by lender, and some work with borrowers who have less-than-perfect credit.

Interest rates differ depending on your credit score, but they’re often competitive compared to other fast-cash options. Some personal installment lenders offer same-day loans online. If your lender does not charge prepayment penalties, you may save money by repaying the loan early.

Paying Bills With Car Title Loans

Car title loans can be used to pay bills or consolidate debt since loan amounts can be high. Car title loans are also called pink slip loans and auto equity loans. They are similar to auto pawn loans obtained at a pawnbroker store. Car title loans usually have a quick approval process because eligibility is based on the value of your vehicle and not your current credit score. 

You could receive a loan with a car title loan based on a small percentage of the overall resale value. This may be enough money to cover emergency expenses, but they are a risky option for borrowers. 

A lender determines the value of a car by considering the make, model, year, and other specifics. If your car is an older model or damaged in any way, you could receive a lot less money than you would if the car was in better condition. The interest rates are usually very high, so this loan option is sometimes deemed predatory. 

During the repayment process, you may lose access to reliable transportation. The car title secures the loan, but lenders may still prefer to possess the car at a secure lot during the repayment process. If you rely on your vehicle to get to work, then you may be out of luck with car title loans. Plus. the lender could repossess your car if you fall behind on payments. 

Paying Bills With Payday Loans

Paying your bills with a payday loan is a risky move. Payday loans are unsecured short-term, high-cost loans. They charge very high-interest rates and carry extremely short repayment periods.

If you can’t repay the cost of the loan plus interest, then the payday loan rolls over. Rollovers mean the lender charges you additional fees. A rollover gives the borrower an additional two weeks for repayment, but this may still not be enough time to pay back a payday loan. Many people end up in a vicious debt cycle attempting to pay off a payday loan under such stressful terms. 

To top it off, the interest rates with payday loans are a financial burden on the borrower. The annual percentage rate (APR) can be as high as 400%. With a high APR rate, you will end up paying significantly more than what you borrowed for medical bills. The Consumer Financial Protection Bureau recommends that individuals who can’t repay should request an extended repayment plan. 

Paying Bills With a Credit Card Cash Advance

Getting a cash advance on a credit card is a convenient option for many people. If you already have a credit card, you can visit an ATM and withdraw what you need. In addition, you don’t have to risk lowering your credit by inquiring about a new loan. You can borrow a small amount against your existing line of credit. 

The amount you are approved to borrow with credit cards depends entirely on credit scores. Having good credit could help you obtain higher lines of credit so you could take out more money with a cash advance. The cash advance limit is a percentage of your credit line, usually 20% to 50%. If your credit is low, you may not be able to get enough emergency money with a cash advance. 

Taking out a cash advance on a credit card will incur many fees, including a cash advance fee and interest rate fees. The cash advance fee is a transactional fee based on a percentage of the amount you withdraw from the ATM. You may be surprised to learn that the interest rate for a cash advance is higher than the standard purchase rate. A cash advance fee is the amount lenders charge for convenience. 

A cash advance loan can quickly shift from a financial convenience into an expensive loan option. But there are also other types of cash advance loans out there as well. So make sure you learn the differences.

Paying Bills With a Student Loan

Student loans can be used for more than just tuition and room and board. If you’re having trouble making ends meet, you could use a student loan to pay for other postsecondary educational expenses, such as books, supplies, transportation, and dependent care while you’re in school.

You can get student loans from banks, credit unions, or online lenders. To qualify for a student loan, you must show proof of enrollment at an eligible school and meet credit/income requirements. Keep in mind that the entire application process and disbursement can take a few weeks to a few months. 

What Fees Will You Pay When You Get Loans?

Before you obtain a loan to help pay bills when you can’t make ends meet, it’s essential to consider the fees associated with loans. There are quite a few fees you may end up paying, although some lenders charge more fees than others. 

Lenders use fees to earn additional profit from the lending process but also to encourage borrowers to stick to their repayment schedule. Take a look at some standard loan fees you may come across:

Strategy	Description
Decrease Your Credit Utilization	Pay off some debt to reduce your credit utilization ratio, aiming for a ratio under 30%. Lenders often view low utilization as responsible credit usage.
Become an Authorized User	If you lack the minimum credit score, become an authorized user on someone else’s credit card. This can boost your credit as the account is reported to credit bureaus.
Get a Secured Credit Card	Secure a credit card with a cash deposit to build credit. Monthly payments will reflect on your credit report, improving your payment history and overall credit score.
Check Your Credit Report Often	Regularly monitor your credit report to identify and correct errors promptly. Awareness of your credit report helps you understand areas for improvement in your credit score.
Practice Patience	Improving credit takes time. Be patient and consistent with responsible credit behavior. Over time, your efforts will be reflected in an improved credit score.

If you want to get a loan to help pay bills when you can’t make ends meet, ask an agent about the fees you may have to pay. 

How To Increase My Credit Score To Make Ends Meet

Increasing your credit is not required to get a loan, but it could help you obtain affordable terms, such as lower interest rates. Having a FICO score higher than 670 is preferred by lenders. You could get the highest score of 850. Only about 1.6% of U.S. citizens have perfect credit history. While it’s true that the higher your score, the better, having perfect credit may be unnecessary. 

These are some tips for increasing your FICO score over time:

Make Loan Payments on Time

Ensuring that you do not make any late loan payments can quickly increase your credit score. Your payment history is the most crucial factor in FICO score calculations. Lenders offer better financial terms to individuals that demonstrate financial stability.

Increase Your Credit Mix

If you have a lot of loans, you may have considered debt consolidation. But having different types of loans could actually benefit your credit score. Managing multiple loans shows lenders that you are an organized person. For example, having credit cards, federal student loans, and personal loans could help balance your credit mix. 

Limit New Loan Inquiries

Limiting the number of inquiries you make can only benefit your credit score. Every time you apply for a loan, the lender conducts a hard credit check. Credit checks appear on your credit report and lower your FICO score by a few points. If you want a loan to help pay internet bills when you can’t make ends meet, consider if you stand a good chance of getting approved. 

Avoid Maxing Out Your Credit Lines

Having a low debt to credit ratio can positively reflect your credit score. Lenders like to see successful financial management, which means using less than 30% of your available credit. Suppose you have a credit line worth $5,000, and you spent $4,000. In that case, lenders consider the high debt-to-credit ratio a sign of risky financial behavior. Try to limit the amount of credit card debt you have to increase your credit score over time. 

Applying for Loans When You Can’t Make Ends Meet

Financial emergencies can completely disrupt your financial budget and cause overwhelming stress. Your home’s plumbing system may need to be replaced, or your pet may require emergency surgery. The good news is that you have plenty of financial options available to you. You could even get financial support for mortgage payments and utility bills online without leaving home. Many people also use loans to pay student loans they obtained when financial aid did not cover the full cost of higher education. 

Applying for a loan could potentially get you emergency cash the same day you inquire about paying mortgage payments. Gone are the days when you had to wait days for an approval decision by a snooty bank clerk. There are plenty of fast cash options available, so think carefully about what you want from a loan. Ask questions about the repayment process and the fees you will be expected to pay. Do not feel pressured by a silver-tongued lender to apply for a loan before you have done thorough research. 

Loan options with flexible qualification requirements generally require the use of collateral, so think carefully about putting an asset on the line. While using collateral could help you secure affordable terms, you could end up losing possession of that asset if you experience financial issues during the repayment process.

FAQs

Can I get a personal loan from credit unions if I have a 580 credit score?

You may be able to; credit unions often offer personal loans to individuals with various credit scores, including those around 580. They are known for their member-focused approach and may provide more favorable terms with personal loans and otherwise.

What is a hardship loan, and can it be a type of personal loan?

A hardship loan is a type of personal installment loan designed for individuals facing financial hardship. These loans often have more lenient terms and are tailored to assist borrowers during difficult financial periods. 

Are hardship loans available from traditional financial institutions?

Yes, some financial institutions offer hardship loans. These are special personal loans that provide relief during financial emergencies, often with modified terms like lower interest rates or deferred payments.

How does applying for a personal loan affect my credit report?

Applying for a personal installment loan can impact your credit report. Lenders typically perform a hard inquiry which may temporarily lower your credit score. However, responsible management of the loan can improve your credit over time.

Can I access hardship loans if I don’t have a bank account?

Accessing hardship loans without a bank account can be challenging, as most lenders require a checking account account for loan disbursement and monthly payment processing. However, some lenders might offer alternative solutions.

What should I consider before applying for hardship loans?

Before applying for hardship loans, consider the interest rates, repayment terms, and any potential impact on your financial situation. Ensure that the loan alleviates your financial hardship without creating additional financial burden.

How important is it to have a bank account when applying for personal loans?

Having a bank account is generally important when applying for personal loans. It not only facilitates the transfer of funds but also helps lenders in assessing your financial stability and transaction history.

Can credit unions provide better terms for hardship loans compared to other lenders?

Credit unions often provide better terms for hardship loans compared to other lenders. Being member-focused, they may offer lower interest rates and more personalized service during financial hardships.

A Word From CreditNinja About Using Loans to Pay Bills 

While some might opt for unsecured personal loans, others might consider a secured personal installment loan using assets as collateral. Home equity loans are another option. A home equity loan is a kind of funding that allows homeowners to borrow against their property’s value. However, those facing financial hardship should be cautious, as some financial institutions might offer terms that aren’t in the borrower’s best interest. It’s always wise to compare offers from online lenders and ensure you have a stable bank account before making any decisions. 

When navigating through financial difficulties, many individuals use personal loans. Credit unions, regulated by the National Credit Union Administration, may also offer a variety of loan options, including hardship loans and payday alternative loans. 

Before you apply for a personal loan, hardship loan, home equity loan, or otherwise to help you pay bills, CreditNinja encourages you to consider options such as: 

• Using money from a savings account
• Evaluating your spending habits and making changes if needed (for example, eating out less or canceling unused subscription services) 
• Asking a trusted friend or family member for a small loan 
• Getting a second job temporarily to earn some extra cash
• Organizing your finances and creating a budget to see if that frees up funds from your income

Want more information about paying bills, getting out of debt, and more? Check out the CreditNinja blog dojo for hundreds of free resources!

References:
1. More Americans say they can’t pay their bills. Here are the states where it’s worst | CBS News
2. How Payday Loans Work | Payday Loan Info
3. How Does a Credit Card Cash Advance Work? | FOOL.com
4. Late Fee Definition | Investopedia
5. What Is The Highest Credit Score Possible? | Forbes