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Options for Dealing with Money Troubles

Credit & Debt

If you’re one to have money troubles, you’re not alone. Most of us have varying money matters to deal with. But no matter the situation, there’s usually a way to solve any issues.

One of the more common occurrences is an unexpected expense, and when you don’t have a savings or emergency fund available, it requires looking at alternatives when you need fast cash to take care of such a predicament. You might try taking a side job or getting extra hours at work, but this usually isn’t the short term quick fix most can use. When your needs are more immediate you might try selling unused items of value, make money online, asking friends or family for a loan, or looking at alternative lenders for help.

Unless you have a great credit score, the banks usually won’t be much help, and it can become necessary to turn to alternative lenders at times for an unsecured personal loan. This type of loan usually has better terms and interest rates for borrowers, but it’s necessary to qualify. That means a good to excellent credit score in addition to the other requirements that are standard. When comparing banks to online lenders they are fairly similar from a borrower’s perspective.

Sometimes the need is urgent, and some Canadians will turn to high interest borrowing options like payday loans. Using installment loans with bad credit can be a suitable option if you qualify. The rates might be a little higher than a personal loan, but they are usually this way as lenders use your credit score as one way of gauging risk, which is reflected in the interest rates at times.

Most experts agree installment loans are similar to personal loans, with the main differences being your credit score can be fair to good, and the amounts and terms for borrowing are often less. But for an unsecured borrowing solution an installment loan is a good option for most. For those that expect better rates and terms, the place to start is improving their credit score. What is often referred to as creditworthiness provides lenders an idea of how suitable an applicant is.

While the rates are high, another alternative is payday loans, which can be helpful if your options are limited. When you don’t have a savings or emergency fund and you need quick cash for bills, repairs (or whatever the reason) and don’t have a great credit rating, it’s an option when there aren’t many, but this should be saved as a last resort type of option.

While many presume this type of borrowing is limited to low-income individuals, it’s found that high-interest loans can appeal to a wide variety of people due to the ease of qualifying for approval, fast cash, and a lack of access to borrowing institutions or financial services due to poor credit. One report suggests as much as 15% of Canadians are unbanked, or about 6 million, while other reports suggest these numbers are higher. Many are low-income earners, but there are also those new to Canada that might not have established a credit history, and those that are underbanked, as well as mid to higher income earners. Often the majority of users for payday loans are dealing with money troubles and in a sort of debt cycle, which can be difficult to escape from. 

Facing the Signs

Sometimes a financial issue is met with denial, even if the signs are there. Using a short-term loan of any type is for special situations. Those that borrow often have a deeper financial issue that needs to be addressed, which can also cause financial stress as well. 

RECOMMENDED: Strategies and Methods to Pay Off Debt

Borrowing for the purpose of debt consolidation can and has worked for many, but it requires someone with self discipline to properly manage it. You can read more about how using a loan for debt consolidation works here for additional insight on whether it’s right for you.

RECOMMENDED: How to Choose the Right Debt Consolidation Loan

Many people that have repeatedly used payday loans in the past have turned to credit counseling or a financial advisor for help to get their finances under control and develop a plan. The repeated use of these types of loans can be a sign of a larger financial concern and a potential debt cycle mentioned earlier. 

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Finding a Solution

For those that are confident that they can handle the issue on their own once they’ve identified it, this can be a great start. To acknowledge there’s a problem can be a big part of any challenge. But you have to be honest with yourself. When finding yourself having financial issues and possibly borrowing one loan after another, it might signal the need for assistance.

A smart way of getting started is taking a look at how you might deal with the credit card debt or other types created, getting started with making use of a budget, and to start examining your credit score to find ways to improve your financial future. 

But if your concerns require more professional help, credit counselors or financial advisors might be more suitable with providing the necessary assistance.

Counselors and Advisors

Not everyone is cut out to tackle their financial issues, and sometimes help is required.

If you choose to speak with credit counselors or financial advisors you should inquire about what is offered because the actual services can vary immensely from one agency to the next. 

Where to Start:

– Will they provide a written proposal describing how they will help you?

– What support will they provide to help improve your money management skills?

You should also ask about whether the first consultation is free, what are the services offered, and will they provide monthly statements of payments for you to review.

If you begin looking into a credit counselling agency for assistance, be cautious about your selection process. Some agencies of this type make promises like saying they can solve your debt problems quickly for only a fraction of the cost of your debt. You should keep in mind that when it sounds too good to be true, it probably is. 

You might read about options like a consumer proposal as a means of getting out from under your debt. It would be recommended that any decision such as this which can affect you for years to come is properly researched and not a decision taken lightly.

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Making sense of finance one day at a time.

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