Hard up for cash but afraid you won’t qualify for a traditional bank loan? You’re not alone; not every LGBTQ person is the financial guru the media makes us seem. You can, however, get the cash you need — and quick — with these alternatives that won’t drive you years into debt.
1. Borrow from a life insurance policy
If you’ve been paying into a life insurance policy, that money is already yours. Certainly, it’s intended to cover the costs of your death and perhaps alleviate some of the financial strain on your loved ones and/or dependents once you’re gone, but if you need to tap into those funds while you’re still alive, it’s an option. Whatever you withdraw will be deducted from your beneficiaries’ payout, which makes them SOL upon your death, but at least you don’t have to worry so much about paying back what you’ve taken out — because, ya know, you’ll already be six feet under.
2. Borrow against a vehicle with a clear title
A clear title on a vehicle means that there’s no financial lien against the car being sold. If it’s rightfully yours — and you need cash — borrow against it, says debt and credit expert Kevin Gallegos of the Freedom Financial Network. This tactic probably won’t work against your beat-up hoopty, so exercise solid judgment before contacting a financial institution.
3. Refinance your home and take out cash at closing
Though a risky move and not possible for all homeowners, if you’re in dire need of a loan, you have the option of refinancing your home and taking cash out at closing to pay whatever impending fees for which you need the money. But you really, really need to know what you’re doing in this case, lest you want to be homeless shortly thereafter.
If you don’t want to refinance, you also could borrow against your home. Still risky, but less ride-or-die than refinancing.
“If you own your home and have enough equity, you may be able to take out a home equity loan or line of credit,” says Gallegos. “You can use the money for anything you’d like, including debt consolidation, and the interest you pay on the loan will be tax-deductible.”
However, using your house to pay off unsecured debt can be very risky. If you choose this route, make sure you leave yourself some financial breathing room so that if something unexpected does happen, you will not risk losing your home.
4. Secure a personal loan
“Personal loans are best for people who know it will take them longer than a year to pay off the debt,” said Gallegos. “This is because personal loans typically charge an origination fee of 1% to 5% of the loan amount, and that must be taken into consideration when calculating overall interest savings. If the timeframe is only a year, with the origination fee, the cost is generally too high.”
Keep in mind, too, that personal loans are not good for people who are unable to make minimum payments on current debt. If that’s the case, you should look into other help, such as debt negotiation (settlement) or credit counseling.
5. Friends and family
As a gay personal finance expert, I don’t usually recommend asking for money from friends or family — it rarely goes off without a hitch — but if you’re in a serious pickle and you’ve exhausted all other options, you may need to bite the bullet. You can negotiate a lower interest rate than you can elsewhere (probably), but that doesn’t mean that you should take advantage of someone’s goodwill. To make this work as best as possible, set repayment terms and dates and stick to them. There are few things people hate more than lending somebody they love money and not being paid back on time. Be a decent human being by doing right by the relative or good friend willing to help you out. Otherwise, you run the risk of ruining that relationship and a host of other consequences — like potential legal action and being branded an A-hole.