Getting $50,000 to Pay Your Debts

You find yourself with $50,000 in outstanding debt and your credit rating is less than perfect. You obviously need a loan – and getting credit in the current economy is a challenge – but if you know where to look and what you need to do to qualify, you can get it.

Finding a Lender

$50000 loanAs with every important decision, you should do your homework first. And do your research. There are companies that ask for fees up front and say they will “fix your credit” or guarantee you a big loan, but this is a scam and it’s designed to take your money and give you nothing in return. The Fair Credit Reporting Act provides protection from these unprincipled creditors. Check with a financial advisor to determine what options you have. Someone you know and trust – preferably someone who is familiar with your credit history – can steer you to a lender that will be willing to work with you. There are financial institutions out there that specialize in giving large loans. If you have a business, there are companies that will make you a loan in return for a percentage of your sales. Once you’ve identified a lending source and applied for your loan, the lender will assess your credit history. Under the circumstances, they may apply certain conditions to your loan. For instance, you may be required to pay higher interest rates than someone with good credit, or you may be subject to higher penalties in the event of a missed payment.

loan contractSecured Loans vs. Unsecured Loans

You can apply for either a secured or an unsecured loan. An unsecured loan typically requires no collateral. A secured loan, on the other hand, will require you to put up something of value – something to secure the loan – which the lender can take in case you default on the loan. Banks are always going to be more concerned about lending money to individuals with bad credit than to those with good credit – but that doesn’t mean you will not qualify. Naturally, a person with a low credit rating will pay a higher price for the loan (in terms of interest rate and other finance charges) than someone with excellent credit, but banks are in business to loan money, so this doesn’t mean that you cannot get the loan you want.

Steer Clear of Adjustable Interest Rates

Once you’ve arranged for your loan, pay close attention to the details of the loan, especially the interest rate the lending institution wants to charge you. You may get what appears to be a great rate on your loan only to find that it is simply a base rate and that the rate increases significantly after some predetermined period of time. You will certainly want to get an interest rate that is a good match to your income and your ability to pay. Anyone trying to sell you anything else is simply taking advantage of your situation.

Debt Consolidation Loans

Consolidating your existing loans – combining all your loans into one – can help you reduce high interest rates and can make managing your credit much easier. This type of loan will significantly reduce your monthly payments. A credit counseling agency can help you decide whether a consolidation loan is right for you.

Video: An Introduction to Debt Consolidation Loans

Is Bankruptcy an Option?

Bankruptcy should be your last resort. There are different types of bankruptcy – Chapter 7, Chapter 11, and Chapter 13, to name a few – and your legal advisor can explain them to you. Essentially, however, when you enter into bankruptcy, a receiver – usually an attorney appointed by the bankruptcy court – makes a list of your creditors and assigns a value to your assets. These assets are usually sold (at pennies on the dollar) and the money received from the sale is used to pay off your creditors. Remember. This should be your last resort. The bankruptcy will stay on your credit record for up to ten years and, for the most part, will prevent you from getting credit during that time.

Video: What happens in Bankruptcy?

Restoring Your Good Credit

Paying back your loan is the critical step toward repairing your credit score. Be sure you closely monitor the loan repayment schedule and make your payments on time. This is your opportunity to prove that you are a good credit risk, so make the best of it!

Other Ways to Get Your Hands on $50,000

  1. Win the lottery!
  2. Create a Killer Application for the Internet
  3. Sell your Mickey Mantle rookie card on eBay
  4. Find Amelia Earhart and write a book about your discovery
  5. Write a script that becomes the next Hollywood blockbuster
  6. Inherit the cash from a long lost uncle
  7. Prove the cosmological String Theory
  8. Invent a better mousetrap
  9. E-mail Oprah (It never hurts to ask!)