Sometimes people make mistakes with their finances. Having said that, even the most responsible person can run into difficulties at times. There could be an immediate need to pay unexpected medical bills or funeral fees. There could be an urgent home repair outstanding, or the car may need to be repaired for work use.
Sometimes the people who need the money quickly are in a position to repay the loan quickly too. This opens up new options alongside more traditional borrowing. Let’s take a look at what loans are, and explore some options right now.
Loans: a definition
A loan is when someone borrows money from a person or company. They agree in advance what the repayment amount will be, and any rate of interest. The agreement will also be reached as to the term of the loan repayment.
Secured loans may use a person’s possessions as collateral. This reduces the risk to the insurance company, so in turn, they offer lower interest rates. By way of contrast, an unsecured loan will demand a higher interest rate.
These are also called paycheck loans. According to the guys at GreenStarCash people can apply online and receive their money very quickly; in terms of timescale, we could be talking less than an hour. If someone has a bad credit history this may not be an issue either.
People may borrow up to $1,000 or in some cases up to six months’ salary in one go. The financial rates can be relatively high to reflect the fact that the money has been released so quickly. A two-week loan could acquire a 400% APR.
Borrowers may be able to enter an e-signature online to save time and will be expected to repay within a few weeks. There are no penalties for early repayment. Payday loans should not be considered in order to pay off other debts or to cover household bills. They are designed to cover emergencies and quick repayments, rather than to sponsor luxuries and entertainment.
These are Payday Alternative Loans. Some credit unions offer these at reasonable costs. This is because the repayment term is expected to be longer. Traditional PALs have to be repaid within six months. Between $200 and $1k can be borrowed. People have to be a credit union member for a minimum of one month. PAL II contracts allow up to a year for repayment and offer a maximum of $2k borrowing sum. For this loan, people have to become credit union members from the start.
Once again, these are designed to be repaid longer term, thus keeping costs down. People will find these on offer online or with banks and credit unions. Whilst people may be relieved to learn there is nothing held as collateral, their income and credit history will be considered, however. The loan could be paid within a day, with between one and five years to repay the sum. These loans are not used for higher education fees.
With title loans, a person’s vehicle can be used as collateral. It would either have to be fully owned (paid off) or have sufficient equity. If the loan is not repaid the car will be taken. A paper copy of the car’s title document would need to be given to the lender upfront. It is usually expected that the borrower will repay the loan within a month. These loans can attract APR rates in the region of 300%.
Pawn Shop loans
These are a step up from simply selling something to raise money. Cash can be given by the lender while they hold a possession. If the loan is repaid, the item is returned. If not, it will be sold. This can be difficult if the collateral was of personal value, be it financial or sentimental.
When taking out such a loan it is essential to read the small print as there may be hidden expenses. These may include set up charges or storage costs. In order to obtain a loan quickly, people can consider payday loans, PALs, personal loans, title loans, or pawn shop loans. Potential borrowers are recommended to consider alternative actions such as selling something or borrowing from friends.
Banks and credit unions are safe choices. When using a loan company it’s important to choose wisely. Different loans meet different needs. The quicker the loan is granted, the higher will be the repayments. People must be sure they can repay the borrowing within the term allowed. When a good choice has been made, the loan will be worth it if it enables urgent fees to be paid, or essential activities to continue.