In any case, you'll want to know about hardship loans as a way to get money even though your finances are temporarily tight. Where do these loans come from? Are they really easier than people think? And what's the catch with them that we don't already know?

A Hardship Loan and Why You Might Need One

A hardship loan is just what it sounds like - a loan you apply for when your current financial situation is significantly worse than usual. Most of the time, these loans are taken out by people who have been laid off from work or who have had to take a break for medical reasons. If you've been thinking that a hardship loan could help you get through difficult times, there's probably something going on in your life right now that makes this type of financing worthwhile.

What Are Hardship Loans?

Hardship loans come from sources other than regular banks and credit unions. They're sometimes given out by friends and family members as favors, but receiving one effectively means giving them back with interest. So if you ask your parents for a loan, in effect you're promising to pay them back when you get your next paycheck.

Other hardship loans come from private lenders who make it their business to be there in times of need. These are the people who work with payday loan companies and online short-term lenders, but they can also make personal loans or lend money through trusted friends.

How Hard Are Hardship Loans To Get?

The answer is yes! Hard Money Loans are easier than other financing when they are used correctly! If you have ever needed money when no one else would lend it to you, then perhaps Hard Money Lending is for you. Remember… No credit check, no bank statements, and no money out of pocket!

What Should I Consider Before Applying for a Hardship Loan?

When you need quick cash, there's never enough time to consider all the angles. But if you're going to take on an extra obligation like a hardship loan, it pays to think long term. Otherwise, your current loss could become permanent. 

Here are some questions you should ask yourself before turning to any kind of money lender:

1. How much income do I really have access to? Your paycheck is not always the best guide for determining how much money you really have available. If you're facing a temporary financial setback but expect it to be over with soon, you might not want to borrow from friends and family at high-interest rates only to pay them back in full with your next paycheck.

2. What's my most pressing expense right now? It may seem like the exact opposite of what we just said - if you don't have money coming in, why worry about expenses? But some expenses are more important than others. If you're borrowing from a friend at 25% interest but paying off an old debt that's charging 30%, is there really any savings?

3. Why am I needing this loan in the first place? If it's because of same each month. Are you expecting another one soon? Have you recently received overtime or bonuses that will quickly cover the cost of the loan? This information can help lenders decide whether or not you'll be able to repay the money you're requesting.

4. What does my credit report look like? Knowing your credit score is important if you need help from more traditional sources, but it's even more vital here because many lenders will use that score to determine interest rates. If your score is low, then all other things being equal, you might not get a loan at all or only under very unfavorable conditions (high-interest rate, high collateral requirements).

5. How much time do I have before I'll need this loan? Since most hardship loans are meant for people who expect a change in their financial situation soon, lenders usually ask for repayment within a month or two. If it will take longer than that for your income to rise or for your expenses to go down, you might be better off waiting.

What is the Difference Between Hardship Loans and Bankruptcy?

Sometimes people confuse bankruptcy with hardship loans, but there is a very important difference between the two. When you file for Chapter 7, all of your debts are wiped out except those that can't legally be erased (taxes, criminal restitution, child support). But when you take out a hardship loan, you still owe it back. 

It's not like once you repay the loan everything will be fine again; if anything, now with interest on top of it all! There's nothing noble about taking this type of financing. If your situation requires it, however inconvenient or embarrassing that may seem, then it's better than giving up.

What is the Difference Between Hardship Loans and Line of Credit?

Another type of financing that often gets lumped together with hardship loans as overdraft lines or credit cards. Even though they can come in handy during an emergency, for most people this kind of unsecured debt is best avoided. These forms of financing usually have much higher interest rates than regular loans, so if you need money because you're facing a financial setback, it makes more sense to seek out cheaper alternatives like hard money lending.

Conclusion

Hardship loans can be a lifesaver for people who find themselves in the midst of an unexpected financial setback and need quick access to money. But they're not without drawbacks; interest rates are higher than most other types of financing, which means you'll end up paying back more over time. 

So before taking out this type of loan, make sure that it's really necessary (i.e., no better alternatives), and don't borrow from friends or family at high-interest rates if your current situation is only temporary. If all goes well, you will soon have enough income again to pay off the loan with little effort on your part. Good luck!