Where can my friend get a loan?
April 25, 2010 7:37 PM   Subscribe

Friend needs about $3000 fairly quickly for an unexpected expense, but has some late payments on her credit report. The credit union she uses and the bank where she has an account have both denied her already because of delinquent accounts.

Asking for a friend:

Does anyone know of a place that does signature (personal) loans to people with fair (maybe poor?) credit?

The bill she needs to cover is tuition her employer was supposed to pay for, but she got laid off before she finished the classes. The school is threatening to turn her over to collections if she doesn't pay it in full within 14 days.

She says she doesn't really care what the rate or terms are that much right now because she's desperate. Doing it somewhere online is fine with her as long as it's through a legitimate lender.

I don't have it to loan her, or I would help her out.The only thing I can really do for her is to post this question. I probably can't cosign either if she needs on because I'm about stretched to my limit financially at the moment.

Oh, and she has found a new job since she's been laid off, but she's only worked there 3 months.

So does anyone do these kinds of loans exist? Can people with damaged credit actually get one with a minimal amount of hassle, or is this a lost cause?
posted by howrobotsaremade to Work & Money (24 answers total) 2 users marked this as a favorite
somewhere something doesn't sound right here... if there was an agreement for the employer to take care of this, the layoff shouldn't have made a difference... or she's not giving you all the information on this story... If I were in this position, I would spend the $100 or so necessary to talk to an employment attorney about this.. I would also negotiate with the school...

a high interest rate loan for someone with bad credit will probably make things worse in the long run.
posted by HuronBob at 7:43 PM on April 25, 2010 [1 favorite]

The school is threatening to turn her over to collections if she doesn't pay it in full within 14 days.

The school doesn't actually want to do this, because their best-case scenario once it goes to collections is getting back pennies on the dollar. She should probably call them, be completely honest, and negotiate a payment plan with them. They have the most motivation to give her credit right now, because the alternative for them is getting either pennies or nothing at all.
posted by drjimmy11 at 7:49 PM on April 25, 2010 [6 favorites]

Also agreeing that it sounds incredibly shady for an employer to lay someone off and then stick them with a tuition bill, and maybe an attorney should be involved.
posted by drjimmy11 at 7:50 PM on April 25, 2010

It's not a good idea, but if her credit is bad and nobody else will loan her money, she can get a payday loan. The interest rate is high.
posted by Houstonian at 7:59 PM on April 25, 2010

First, don't co sign for the loan and I would highly recommend that people don't loan her money--if she is a bad credit risk, that means she doesn't pay her debts! I am also leary of people who don't have a job (I see she got a new one) but still want to take out a loan. Yikes. That said, you usually pay tuition prior to class starting. It seems like if she can't pay tuition, she just wouldn't be able to attend class. If she has been attending and had student loans, she should be able to get a forebearance because she was out of work. If she was attending school and for some reason didn't need to pay until she finished (?) but it was part of her agreement with her employer and she got laid off, it seems like the employer should still pay the tuition because they had an agreement and it wasn't her fault she got laid off--maybe small claims court if she has this agreement in writing? I may be misunderstanding this situation but it seems odd...
posted by MsKim at 7:59 PM on April 25, 2010

This kind of thing happens with employers, doesn't it. Small time ones make promises and turn to assholes when the situation changes (not all, but enough). If it was a big time one and they required the training, they should have paid it up front, but they may have set it up as a reimbursement situation, and she's not eligible any more. Either way, I assume she got screwed around by the employer.

As to the question, don't go to some really high interest place and beg for a loan. There are places around that might do this, especially if she has a job and a regular pay check, but she shouldn't. Even if they have a store front and a state license those places are no better than loan sharks.

From my experience she will do better talking to the school. Even if it is a proprietorial institute, they really only want their money, and giving it to a collection agency will cost them a lot, more than working with you friend would.

I'm not saying they will make it easy on her, they may make it very hard, but they will negotiate and probably set up a payment schedule. What the person who answers the phone says, isn't the final word, talk to a supervisor. Better yet, talk to an instructor and ask for help. At least help and finding the right person to talk to.
posted by Some1 at 8:05 PM on April 25, 2010

I hate to post incessantly in my own question, but I am about to leave for the evening and I won't be able to check this until tomorrow sometime, so here's all the details I have about the situation:

Regarding the employer, I have no idea what went on behind the scenes with that. All I know is that their paychecks started bouncing and then shortly after that she was abruptly let go. I'm not sure if the company is still even around or what the details of her tuition reimbursement benefits were. I can ask her tomorrow if it's important.

The school is also not a regular university, it's one of those "business colleges" that advertises aggressively. It was some sort of certificate program for administrative skills. Again, that's all I have on that part.

I would guess she needs this money in the next couple weeks before she starts thinking of suing people or whatever.

Not trying to be rude at all, and I think it's sound advice about getting a lawyer, but can we answer the question about the loan with any specific lenders she could try instead of talking about the legalities of the situation right now? I'm just going by what she told me, so I can't speak for whether or not what happened is legal or anything like that.

I emailed her a link to the thread and I could probably call tomorrow and ask her some questions if there are details that need to be clarified though.

Of those payday lenders, does anyone know of a legitimate one she would want to try? If she could get 50% of the bill (around $1500) I think that would help buy her some time to deal with things.
posted by howrobotsaremade at 8:16 PM on April 25, 2010

A payday loan would only delay payment by two weeks at most, then you have to repay in full, but you can borrow the money again right away. But you have to pay in full every two weeks. AAAnd I don't think you can really get $3000 right away.

The best thing for her would be for her friends to chip in and loan her the money at a reasonable interest rate. If you have 5 people, that's just six hundred dollars each. Do you personally think she's a good credit risk?

She could also just not pay the bill. It would make her credit worse, but it's already bad. So it's not that much of a loss. If this was for some really important degree, or whatever, it might make sense but if it's just for an administrative certificate, why worry about it? I guess it depends on how much of an improvement in her earning potential it would actually entail.

Honestly, is this certificate even worth $3k?

Also, does she have a car worth more then $3000? A lot of places will do a title loan where you put your car up for collateral.

And obviously this is easy for me to say, but what about selling the car? She could switch to a bicycle, a moped or some beater of craigslist.
posted by delmoi at 8:36 PM on April 25, 2010

Seconding talking to the school about a payment plan, instead of getting another lender involved.
posted by sninctown at 8:45 PM on April 25, 2010

Also, she should consider talking to a lawyer. Even if she doesn't ultimately have a legal recourse, a call from a lawyer might be more likely to get them to back off for a couple months over "pending litigation"
posted by delmoi at 9:01 PM on April 25, 2010

Er, lawyers cost money, and trying to collect from a company that sounds like it's gone bankrupt, probably won't help.

It's degrading, but often family members either outright have the cash or can pool it together, providing it's for a good cause such as education.
posted by hungrysquirrels at 9:04 PM on April 25, 2010

Nth trying to set up a payment plan with the school -- with her credit the way it is, although the payment terms with the school may end up effectively having a very high interest rate, it is unlikely the school will offer her worse terms than she'd get from a payday lender, car title lender, pawn shop, etc. (if she could even get one of those loans for enough to cover the tuition bill).

Also, if she has anything in writing from her employer promising to pay the tuition, perhaps she can get the school (or the school's collection agency) to go after the employer instead? (Not a huge chance of that, but worth a shot.)
posted by Jacqueline at 9:53 PM on April 25, 2010

Payday loans are the worst kinds of horrible, and shouldn't really be considered an option. There's a big fat reason they're getting slowly legislated (US) out of existence. There are zero "legitimate payday lenders" And if the friends credit is even approaching bad, they won't get a decent signature loan from any legitimate bank.

There's a big lack of data on just why the big payoff needs to be so soon. You say they have "the next couple of weeks", so what's the eagerness to get this done right now?

Where are they gonna charge said friend 3k? The checking account? That can be dealt with, via the bank. A student account? That can be dealt with, usually via the student burser. Some douchebag lawyers trying to collect on a bad debt, fuck em.

posted by Sphinx at 10:50 PM on April 25, 2010

Negotiating a payment plan with the school would be best. I'm not 100 percent positive what being "turned over to collections" would mean in this instance (e.g., is the collections agency someone hired to hassle people, or are they actually selling away the bad debt?), but it isn't the worst thing in the world, particularly if her credit is already bad. Personally, I'd save aggressively, get a second job, and call them up offering to send what I do have only if they set up a plan for paying the rest.

creditboards.com/forums would be a good place to research this question, and also to learn more about dealing with this collections agency and ultimately fixing up her credit report.
posted by salvia at 11:04 PM on April 25, 2010

I don't think any one is going to tell you which usurious, slime ball, leach (ie. payday loan company) to use because they are all soul sucking blights on the world. If anyone did do that, there would be 50 people on here screaming at you not to listen to them.

Just Don't Do It. -- at any rate all they will give you is a part of your next pay check, and then take a much larger part of the check when you received it.

Just Don't Do It.

Go and talk to the school. Your friend isn't the first student this has happened to. They will talk about collection companies and lawsuits and worse, but they don't want to do those things because it will cost them money, lots of money. Go and talk to them and try to negotiate.
posted by Some1 at 11:07 PM on April 25, 2010 [1 favorite]

I wonder if her new employer would be willing to advance her the money and take the repayments out of her weekly wages. It can't hurt to ask, even if they will only advance some of the total she owes.

With delinquent accounts on her credit record, even if she could find a lender the interest rate at which they'd lend would be setting her up for financial trouble - it would be well above credit card rates. I'd be concerned that if she's already delinquent on accounts, trying to catch up on those in addition to taking on junk debt would be courting financial disaster.

I know you say that she doesn't care about the interest rate, but is she really willing to sign up for a loan where the interest rate is well above 30% and it will be jacked several % upon any late payment in addition to her being hit by penalty (I've seen these as high as $200) for the late payment as well? Those kind of loans are only workable if you absolutely know you'll be able to refinance or otherwise discharge them within a few months (the delinquencies would probably prevent her from doing this, even after she's been with her current employer longer) and are willing to wear the quite substantial early termination fees.
posted by Lolie at 12:02 AM on April 26, 2010

As noted by many others, she doesn't really care what the rate or terms are is a self-destructive way to approach this situation. She's allowing herself to be driven into a trap, fearful that something terrible will happen if she doesn't do whatever she's told. In reality, something terrible is much more likely to happen if she allows herself to be cowed by the schools' threats.

The school would love it if she gets a payday loan, because it would mean that the school would get all of its money up-front. In hopes of achieving this, the school dispenses threats. This is the ploy your friend is falling for. The school can't force her to do it; they can only hope to scare her into doing it.

From the school's position, actually sending the bill to collections sucks. It means they lose a lot of money, with no hope of ever recovering it. The school would much rather get all of their money slowly (through a payment plan) than a little of their money immediately (from a collection agency). So long as your friend is able to pay something towards the debt on a very regular basis, she has most of the power here.

Your friend needs to figure out how much she can afford to pay against the debt each pay period, then go to the school (with checkbook in hand) and negotiate terms she can live with. If the school agrees (in writing) to terms she can live with, then they get their first check immediately. If they don't, they get nothing. Can you see why they'd rather agree to her terms?

Your friend's frustration, shame and fear are blinding her to the reality that she has real power here. The payday loan company's doorway is the ramp up to the slaughterhouse. Your friend should not let some little guy waving a stick herd her through it.
posted by jon1270 at 4:59 AM on April 26, 2010 [4 favorites]

Twenty millionthing the DO NOT GET A PAYDAY LOAN sentiment in this thread. It could go a long way to making what was a tricky situation TOTALLY IMPOSSIBLE. I spent at least three years chasing my tail over those things- you borrow what you (think you) need, then next payday you're borrowing again to catch up on what you had to pay back from the last loan you got, and so on for all eternity. Plus, the rates and fees are utterly predatory. There must be a better way..
posted by Philby at 5:43 AM on April 26, 2010

She doesn't have a 401K, does she? She may be able to withdraw some of the money, paying a ten percent penalty and taxes on the money. It's not always a good idea, but much better than a payday loan. Even if she qualified for one, they'd never give her $3000 at first.
posted by soelo at 7:23 AM on April 26, 2010

discuss pymt arrangements with the school.
if she has written agreements from employer about paying the tuition as well as the paychecks which bounced, i think she'd be in a fair position to say it was really not her fault.

PAYDAY LOANS ARE A BAD BAD IDEA i say from experience. i never got into real bad trouble with them, but i have seen two people get into some bad trouble with loans for amounts over $500. bad bad idea
posted by sio42 at 7:36 AM on April 26, 2010

Yes, sitting down with the school and discussing a repayment plan is the best way to go here.

OMG A BILL IN COLLECTION!!! is not as bad as it sounds. I have [medical] bills that are "in collection" and all that really happens is there is a ding on my credit report and they send me annoying mail occasionally. Having a bill go to collection is about ten thousand times better than getting a payday loan.
posted by anastasiav at 8:00 AM on April 26, 2010 [1 favorite]

This doesn't help the OP's friend, but to HuronBob and others who question whether or not an employer would lay off an employee and then stick them with their tuition payments, I tend to think that this is true. I've worked at two universities that offered tuition remission and in both cases the stipulation was that you remained in their employ until the official end of the semester. While it seems to be more for people who are quitting, I imagine that it can unfortunately be applied to those who are laid off. So yeah it is a sucky thing to do, and maybe the OP's friend has got the facts wrong, but to me at least, it rings true.

What sounds worse to me is the school only giving her 14 days to cough up the tuition. I would hope that they would be able to work out some sort of payment plan with the school.
posted by kaybdc at 8:24 AM on April 26, 2010

Prosper, a peer-to-peer lending site, though the verification process can take a week or two.
posted by cranberryskies at 3:29 PM on April 26, 2010

I haven't had a chance to update since I've been so busy the last couple days.

My friend said she had to try a few places but was able to take out a title loan using her car for collateral and it was enough to cover the bill.

It sounded like everything worked out how she wanted it to and she says to tell you all thanks for the advice.
posted by howrobotsaremade at 7:07 PM on April 28, 2010

« Older Help id the manufacturer of this c.1963 shower...   |   How can I get my Facebook photo out of my e-mail? Newer »
This thread is closed to new comments.