Buying Local, and Emergency Loans

Laveta Brigham

Then we pivot to this week’s question from Michelle. She says, “I recently got into a fender-bender that left the back of my car pretty messed up. It still drives, but one of the doors doesn’t open, and a window is cracked. I want to get it fixed, but I […]

Welcome to NerdWallet’s SmartMoney podcast, where we answer your real-world money questions. 
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Welcome to NerdWallet’s SmartMoney podcast, where we answer your real-world money questions. 

This week’s episode starts with a discussion about how to help small, local businesses, which have been hit much harder by the pandemic than the big online shopping sites. One way is to seek out local sources for products you might otherwise buy from the online megastore. Another is to order directly from local restaurants rather than using delivery apps. If money is tight, a social media shoutout or five-star review can help others discover local gems.

aren’t prepared for unexpected expenses, including car repairs. If they don’t have savings or good credit, a so-called “small-dollar loan” may seem like a good option.” data-reactid=”28″>Many people aren’t prepared for unexpected expenses, including car repairs. If they don’t have savings or good credit, a so-called “small-dollar loan” may seem like a good option.

debt trap.” data-reactid=”29″>Small-dollar loans are usually for amounts of $2,500 or less. Banks, credit unions and reputable online lenders typically don’t make loans this small, so people often turn to payday lenders or unsavory online outfits. Interest rates can be extremely high and you may have only days or weeks to pay off the loan, increasing the chances you’ll have to renew the loan or borrow elsewhere to pay it off. This is known as a debt trap.

payday alternative loans” that allow people to borrow small amounts at reasonable interest rates. Borrowers can pay off the balance over 6 to 12 months, reducing the chances they’ll have to borrow again.” data-reactid=”30″>Some credit unions offer “payday alternative loans” that allow people to borrow small amounts at reasonable interest rates. Borrowers can pay off the balance over 6 to 12 months, reducing the chances they’ll have to borrow again.

save up the cash she needs. If not, she has time to check with local credit unions to see if any offer these alternative loans. A co-signer also could help her get a loan at a reasonable interest rate, or she could look for lenders willing to make secured loans — personal loans backed by an asset, such as a car or home — at a reasonable rate.” data-reactid=”31″>Michelle’s car is still drivable, so she may have time to save up the cash she needs. If not, she has time to check with local credit unions to see if any offer these alternative loans. A co-signer also could help her get a loan at a reasonable interest rate, or she could look for lenders willing to make secured loans — personal loans backed by an asset, such as a car or home — at a reasonable rate.

[email protected]. To hear previous episodes, return to the podcast homepage.” data-reactid=”37″>Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected] To hear previous episodes, return to the podcast homepage.

Another alternative would be to add a co-signer to your loan. Some banks and online lenders let people add co-signers, which is a person who has maybe a better credit profile, less debt and a higher income. And if you add a co-signer, not only could you get a loan that you might not otherwise qualify for, you might even get reasonable rates and a higher loan amount. The downside of adding a co-signer is that that person is essentially on the hook for the loan if you can’t repay it, and so their credit is also on the line when they co-sign your loan.

 

Liz Weston is a writer at NerdWallet. Email: lweston@nerdwallet.com. Twitter: @lizweston.

Sean Pyles is a writer at NerdWallet. Email: spyles@nerdwallet.com. Twitter: @SeanPyles.

The article Smart Money Podcast: Buying Local, and Emergency Loans originally appeared on NerdWallet.

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