Financial stability is one of the most commonly followed goals for many individuals. Even with the best efforts, a survey from CNBC suggests that 70% of Americans are feeling financially stressed. In such circumstances, a hardship loan is one of the many options explored by people.
Hardship loans are one of the most helpful ways for people under financial stress to get back on their feet after a financial crisis. Even with so many people being helped by hardship loans every year, many still wonder about how it helps one overcome their financial troubles.
Here are some of the best ways how hardship loans help you overcome trouble.
One of the best benefits of taking hardship loans from private loan companies is that they rarely follow up about where your money is used. This benefit gives the borrower the advantage of using the amount the way they want.
Although it is in your hands to make a call, Lantern by SoFi suggests that getting the hardship out of the way as a priority.
Instead of taking your financial stress lightly, hardship loan companies approach your problems with a sympathetic point of view. They provide you with a lump sum amount to ensure that you can use it however you want.
Having a collective amount in your hands means that you do not have to wait to be aided in installments. Instead, you can work on the root cause of the problem right away to find some relief.
As mentioned above, hardship loan companies understand that their clients face urgency. Looking at the circumstances, they ensure that once approved, you can access the funding as soon as the same day of applying. At most, it will take a couple of days.
The efficiency of this process ensures users that they can cater to their emergency at the earliest instead of having to wait for weeks.
Build Your Credit Score
Applying for a hardship loan can lead to a hard inquiry. It means that your credit score can fall down a few points. The fear of losing credit points has become one of the biggest reasons why people feel unsure about hardship loans.
Although you will lose credit points from a hard inquiry, you can regain them easily by using your loan responsibly and repaying it timely.
Better Borrowing Limits
The funding offered as a hardship loan can vary from company to company. Some personal hardship loan companies can offer up to $100,000 in loans depending on several factors, such as employment history, credit score, income, and more.
On the contrary, your ability to use credit cards for emergencies can be limited by your credit limit and with a higher interest rate. This information makes hardship loans a better choice.
Predetermined Repayment Schedule
Personal loans come with a set repayment term that you agree to beforehand. It means that a fixed amount must be paid at a predetermined time of time. You can feel more accountable with a deadline at hand.
In addition, a defined repayment schedule ensures that you will be debt-free in a specific amount of time, unlike being stuck in a loop with credit cards.
Predictable Repayment Terms
Just as the repayment schedule of hardship loans is predetermined, the terms and conditions are also set ahead of time. Most lenders offer flexible repayment terms from 12 to 84 months.
These repayment terms are flexible and can vary from lender to lender. It is better to discuss such details in advance to avoid any bad surprises.