Have you ever needed money for an emergency? While everyone has to deal with financial emergencies sometimes, not everyone has access to quick cash or credit.

That’s where an income-based loan (which is really just a personal loan) could help. Some lenders could be using the term “income-based loan” to indicate they might be willing to extend personal loans to people who have little-to-no credit history but who show they have the income and ability to repay the loan.

If your credit isn’t great or you don’t have much of a credit history, getting a personal loan from a traditional bank can be more difficult because they often have stricter lending standards. But some lenders are more willing to look at your income and ability to repay when considering you for a personal loan.

The downside to a personal loan that’s based on income? Interest rates can be dangerously high in some cases. But if you use an income-based loan to help build your credit, you may be able to get better terms in the future.

Here’s what you need to know to help make the best decision for your circumstances.

How do income-based loans work?

Lenders will use different criteria and methods to determine if you’re eligible for an income-based loan (which again, is really just a personal loan). Some lenders perform a soft credit inquiry before offering you a loan while others won’t pull your credit history at all.

Note that it’s common for predatory lenders to offers loans without any credit inquiry at all. Watch out for this type of loan: It may have high interest rates and fees.

Payday loan lenders may not pull your credit, but they may require you to verify your income and bank account information. Because of the high fees that come with payday loans, it’s possible to get stuck in a debt trap.

Understanding secured vs. unsecured loans

Since income-based loans are personal loans, they can be either unsecured or secured loans.

When you get a secured loan, you offer a piece of property, like your car or home, to the lender as collateral for the loan. If you fail to repay the loan as agreed, the lender may be able to take the collateral to try to recover any unpaid amount.

On the other hand, an unsecured loan does not require you to put up any collateral, so it’s generally considered less risky to the borrower. But you’ll generally pay a higher interest rate because the lender faces a higher risk.

How can I apply for an income-based loan?

Even if your credit history is rough, you may be able to find a lender that weighs your income more heavily when deciding whether to issue a personal loan. But you’ll want to do your homework before making a decision.

Keep an eye out for this information as part of your loan application and loan terms.

• Income verification: Lenders will typically verify your income so they can gauge how much you’re capable of repaying.
• Loan amount: The amount you qualify for will depend on your income and credit history.
• Loan term: Your loan term will typically range from six months to 60 months. Keep in mind that the longer the term, the more you’ll pay in interest. Although you’ll have higher monthly payments, you could save money with a shorter loan term.
• APR: Personal loan APRs often range from 5% to 36% or more, but payday loans can have much higher APRs — even in the triple digits. This can include not just the interest rate on the loan but also any fees that you may pay.
• Account information: Lenders may also often ask for your bank account details to verify your financial information.
• Restrictions: Lenders may not offer their loans in some states.

How to use income-based loans to build your credit

If you get a personal loan it can help you build your credit if you use it responsibly. If you can raise your credit you may be able to qualify for better financial terms in the future.

Here are some ways you can use an income-based loan to improve your credit health.

• Making your payments on time: Make sure your lender is reporting your on-time payments to the three major consumer credit bureaus — this is one of the most important factors that affects your credit scores.
• Getting another form of credit: Getting a personal loan might add a new type of credit to your credit reports. Your credit mix — which considers different types of credit such as installment loans, credit cards and mortgages — is a factor in your credit scores, though not one of the most crucial.

Bottom line

An income-based loan can be a useful tool if you need money quickly and your credit isn’t great. Be sure to look into all the terms before choosing a lender — and if you’re able to use the loan to build your credit, you may be able to get better options in the future.

If you’re living paycheck to paycheck — like many Americans — what happens when you need money for sudden expenses?

As you weigh your options, you might consider borrowing money through an online payday loan lender. Here’s what you need to know before you choose that option.

• What are online payday advances?
• How online payday advances work
• Proceed with caution
• What are some alternatives to payday loans?

What are online payday advances?

You can get payday loans from payday lenders at storefronts. If you want to get a payday loan, you can go to a physical establishment and apply for a loan, which may require you to give the lender a postdated check to cover the loan amount plus fees.

As the name indicates, the payday cash advance can help tide you over until your next payday. Most of these payday advances — also known as deferred deposit loans, payday loans and check advance loans — are short-term loans for small amounts, often $500 or less.

Getting a payday advance online is similar, but you are entering into the transaction online instead of in person. Be aware that you may be asked to authorize an automatic electronic payment from your bank account for the repayment.

How online payday advances work

It’s easy to find lenders who offer online payday advances. To qualify for an online payday advance, lenders’ requirements may include U.S. citizenship or permanent resident status and that the borrower be at least 18 years old.

Here is some of the information you may need to provide during the application process.

• Your name, address and contact information.
• Your employment and income information, including when your next payday is. You may need to provide documents verifying your income.
• Your checking account, including account numbers.

These online loans can often be approved quickly — sometimes even without a credit check — and funds may be available by the next business day through direct deposit into your bank account.

While it seems as if online payday advances make it easy to get cash quickly, these loans are not available in all states — some have banned payday loans outright.

Proceed with caution

While it may be easy to get a payday advance online, potential borrowers should be cautious.

Payday loans typically come with fees that equate to shockingly high interest rates. Calculating the equivalent annual percentage rate enables you to compare lenders on an equal footing and pick the lender that gives you the best terms.

It’s common for payday loans to charge fees ranging from $10 to $30 for every $100 borrowed. Say you take out a four-week payday loan for $200. If the lender charges $20 in fees for every $100 borrowed, you’ll end up paying $240 altogether. To put the fees in terms of APR, you’d be paying interest at a rate of more than 260%.

You’ll want to keep in mind that when your loan repayment is due — on your payday — you will be short the $240 you owe for the loan and fees. If you’re already living paycheck to paycheck, this shortfall could leave you strapped for cash. You could end up having to borrow more money to cover the deficit and pay your bills. Your lender could offer to extend, or “roll over,” your loan if you can’t afford to pay it back.

If your state law permits rollovers, you may be required to pay your fee on the original amount owed and a new fee to extend the terms. If your rollover fee is $40, you’ve now been charged a total of $80 in fees. Plus, you’ll still owe the original amount borrowed, bringing your total amount owed to $280.

Payday loans are expensive, and they don’t offer a long-term financial solution. While you’re working to pay off a payday loan, you might not even be earning enough money to cover the additional fees. That’s how this sort of financing arrangement can trap you in a debt cycle.

What are some alternatives to payday loans?

Payday loans can trap you in a cycle of debt. Before you decide to apply for one, consider some alternatives, like …

• A personal loan from a credit union
• A paycheck advance from your employer (if available in your state)
• An emergency personal loan
• Credit counseling
• A debt relief solution

Learn more about the dangers of payday loans.

Bottom line

Getting a payday advance online should be a last resort. If you have no other choice for your short-term financial needs, take the time to shop around and compare terms from different lenders.

If you’re living paycheck to paycheck and you have a financial emergency, it could be hard to avoid getting stuck in a cycle of debt. If you have the resources, consider making a budget and building up your emergency fund. You could also opt for credit counseling to help you organize your finances and learn about building credit — which can give you a chance to get better terms from other types of lenders in the future.

If you’re a homebuyer looking at property in a competitive market, you may want to consider writing a personal letter to the home seller to help land your dream home.

Although hard data on how well these letters work is hard to come by, there’s some anecdotal backing for the idea that these letters may sway sellers when they’re deciding between two similar offers.

It’s important to note that a letter to the home seller isn’t likely to overcome a higher offer or one that has fewer contingencies or a lot more cash for a down payment.

But if a seller is weighing two or more similar offers, a letter that describes what you like about the house, empathizes in a sincere way with the seller and conveys your feelings about the home may help tip the balance in your favor. It’s not hard to write these letters, especially if you genuinely love the home you’re bidding on.

Read on for a few pointers on how to write your letter to the home seller you’re trying to win over.

• Tip 1: Be specific
• Tip 2: Make it personal
• Tip 3: Stay positive
• Tip 4: Time it right
• Next steps: Look at samples

Tip 1: Be specific

If the sellers have lived in their home for a while, there’s a good chance they’re attached to it and would like the people who buy it to love it and take care of it. So, your letter should spell out how much you appreciate the home and the care the seller has put into its upkeep. Be specific! Say something nice about the kitchen tiling or the layout of a particular room and how you can picture yourself using it.

Tip 2: Make it personal

Keep in mind that other bidders are probably writing letters to the seller too. There’s nothing you can do about that, so focus on being real and personal.

You may be able to pick up clues about the sellers when you visit the home. Try to recall if during your tour of the home you discussed anything you had in common, and consider mentioning it in your letter.

For example, if you can tell the home seller is an avid gardener, you could mention how much you loved the backyard. And if you happen to be a gardener yourself, you could mention that as common ground.

Ask your realtor if they can share the seller’s name, so that you can include it in the letter.

Tip 3: Stay positive

Don’t get too personal when drafting your letter — remember, you and the seller probably just met (or haven’t met). Keep it positive and light. You don’t need to share your entire life story. And remember, there are federal and state laws that are meant to protect people from certain kinds of discrimination.

You may also want to skip any mention of plans for a major renovation, as that could tug on the seller’s heartstrings — you’re going to do WHAT to the room we ate dinner in as a family for 20 years?

Tip 4: Time it right

Opinions vary about when to send your letter. Some agents recommend sending it as soon as you see a home and decide that you’re interested. Others prefer to include the letter in the formal purchase offer — think of it as a cover letter. Your real estate agent should be a good guide to what’s expected in your market and what’s legal.

Next steps: Look at samples

If you’re curious, you can find examples of these letters on the web, or you can ask your agent for a template. Here are a few published by Housing Wire, a real estate news site.

And here’s some information to consider including in your letter to the homeowner.

• What details draw you to the home
• Why you want to buy the home (a great neighborhood for the kids, for example)
• What you like about the neighborhood or area of town
• Basic information about your family (such as how many children you have)

Want to learn more? Check out some of our top mortgage lenders for first-time homebuyers.

• Homebridge Mortgage: Homebridge offers resources that specifically cater to first-time homebuyers.
• Rocket Mortgage: Consider Rocket Mortgage if you’d prefer an online-first experience.
• PennyMac Mortgage: PennyMac offers a wide variety of home loans and shares current rates on its site, which can be helpful for people looking to buy their first home.
• USAA Mortgage: USAA is a good option for military members and their families.