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Financial Hardship: Loans and Alternative Programs

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Financial hardship is when you can no longer keep up with your financial obligations, such as loan repayments, rent payments, utility bills and credit card balances. Financial hardship is often caused by or made worse by unemployment, medical emergencies, divorce and other unforeseen financial hurdles.

If you’re experiencing financial hardship, qualifying for a personal loan can be difficult. However, you may have a few loan options as well as alternatives to tide you over in times of need.

What is a hardship loan?

There’s really no such thing as a personal loan specifically for people who are experiencing hardship. Plus, getting a loan while unemployed would be difficult, as most lenders want to see a proof of income to make sure you can repay the loan.

Still, some people who just need some money to make ends meet may be able to find a personal loan to tide them over. Weigh your options in the sections below.

Loans to consider when you’re experiencing financial hardship

  1. Bad credit loans
  2. Secured personal loans
  3. Joint personal loans
  4. Credit union personal loans

1. Bad credit loans

Unsecured personal loans don’t require collateral, and lenders determine your eligibility and interest rate based on your financial profile, including your credit score. However, some personal loan lenders extend their offerings to borrowers with subprime credit.

One caveat: Personal loans can be a costly borrowing option if you have bad credit. APRs are heavily impacted by your credit history, so bad-credit applicants may only qualify for personal loans with high APRs. Since APRs are an annualized measure of the cost of a loan, a high APR makes for an expensive loan.

Personal loans for bad credit
Lending platform APR Loan length Loan amount
Avant 9.95%–35.99% 24 to 60 months $2,000–$35,000
LendingPoint 9.99%–35.99% 24 to 60 months $2,000–$36,500
Upstart 6.46%–35.99% 36 or 60 months $1,000–$50,000

2. Secured personal loans

Personal loans are typically unsecured, but secured loans may be an option for borrowers who wouldn’t otherwise qualify for a loan. Personal loans can be secured by an asset, such as a car, or money in your savings account or CD. It can be easier to qualify for a secured personal loan, but keep in mind that the lender may seize your collateral if you don’t repay the loan.

Borrowers who are experiencing financial hardship and need a loan probably don’t have money in their savings account to use as collateral. Here are a few lending platforms that let you use your car title as collateral on a personal loan:

Secured personal loans
Lending platform APR Loan length Loan amount
Avant 9.95%–35.99% 24 to 48 months $5,000–$25,000
OneMain Financial 18.00%–35.99% 24 to 60 months $1,500–$20,000
Upgrade 6.94%–35.97% 36 or 60 months Up to $50,000

3. Joint personal loans

Borrowers with subprime credit who have a spouse or family member with strong credit could consider opening a joint personal loan. It may be easier to qualify for a personal loan, and to qualify for a personal loan at a lower APR, if you enlist the help of a co-borrower.

When you take out a joint personal loan, both parties that sign the loan agreement are responsible for the debt. You’ll want to find someone who can trust you to make payments on the loan, because both borrowers will face the consequences of defaulting on a joint loan.

Personal loans that accept co-borrowers
Lending platform APR Loan length Loan amount
LendingClub 8.05%–35.89% 36 or 60 months $1,000–$40,000
Prosper 7.95%–35.99% 36 or 60 months $2,000–$40,000
SoFi 5.99%–18.85% 24 to 84 months $5,000–$100,000

4. Credit union personal loans

Unlike traditional banks and online lenders, credit unions are nonprofit, member-owned financial institutions. Credit unions may be more willing to extend their personal loan offerings to long-standing members, even if they have subprime credit.

Check with your local credit union to see if they offer personal loans, or if you qualify for membership at any of the credit unions in the table below.

Credit unions that offer personal loans
Lending platform APR Loan length Loan amount
Alliant Credit Union 6.24%–10.24% 12 to 60 months $1,000–$50,000
Navy Federal Credit Union 7.49%–18.00% Up to 60 months $250–$50,000
PenFed Credit Union 5.99%–17.99% Up to 60 months $500–$50,000
Also consider payday alternative loans: Federal credit unions may offer payday alternative loans (PALs), which are small-dollar loans worth up to $2,000 that are repaid in one to 12 months with a max APR of 28%. These loans are regulated by the National Credit Union Administration (NCUA), so ask your local credit union branch if they’re offered.

Alternatives to taking out a hardship loan

Taking out a personal loan isn’t always an option if you need money to tide you over in times of financial hardship. Here are a few other ways to find financial help when you need it:

Apply for hardship programs through your bank

Many financial institutions offer programs like loan forbearance and fee waivers for their customers who are experiencing financial hardship. If you’re eligible for an emergency assistance program, you may qualify for help when it comes to paying your mortgage, personal loan, auto loan or even credit card.

Hardship programs vary from place to place, so get in touch with your financial institution if you’re having trouble making loan payments or keeping up with your credit card balance.

Coronavirus hardship: For more information about hardship programs offered by banks and lenders amid the coronavirus pandemic, visit

Consider a 401(k) hardship withdrawal

It may be possible to access the funds locked away in your retirement fund if you qualify for a 401(k) hardship withdrawal. Qualifying circumstances include:

  • Medical expenses
  • Funeral expenses
  • Education expenses, like tuition or room and board
  • Costs related to purchasing or repairing a home (excluding mortgage payments)
  • Costs related to preventing eviction or foreclosure

The amount you withdraw is typically limited to what’s needed to cover the expense. You don’t have to repay the withdrawal, but you’ll lose the money from your retirement fund, and you may have to pay income taxes as well as a 10% early withdrawal penalty if you’re younger than 59 ½.

Download a paycheck advance app

Apps like Earnin give you access to money from your upcoming paycheck based on hours you’ve already worked. So if you’re employed and you simply need a small sum of money to hold you over until your next payday, you could consider utilizing a paycheck advance app.

Most paycheck advance apps offer their services for free and without a credit check, although some charge a monthly fee or request a voluntary tip. There may also be limitations based on where you bank and work.


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