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If you need to borrow money for an emergency or special opportunity, a cash loan is one option. However, there are alternatives to payday loans and credit card cash advances that offer better terms.
Typically, payday loans and cash advances come with high fees. They also trap borrowers in debt because they roll over their loans frequently, racking up more interest charges each time.
Emergency Money
When an emergency arises, a cash loan can provide a safety net to help you cover unexpected expenses. These expenses include medical and dental bills, car repairs and job loss. Emergency funds can also help you cover unanticipated events, such as holiday gifts or birthday presents. To prevent these expenses from requiring a cash loan, make it a priority to save money for them in a savings account or another investment vehicle.
You should also avoid emergency loans from payday, auto title and pawn shop lenders, which often charge high interest rates and are predatory to borrowers. These lenders may not review a borrower’s credit or income before offering them loans, and they can trap borrowers in a cycle of debt.
Personal emergency loans from banks and online lenders usually my loan reviews offer the most affordable options. Credit unions can be particularly competitive because they use membership history, income and credit to make a lending decision. They may also have lower interest rates than other lenders.
A cash loan can be a good way to meet an urgent need, but only when it’s used wisely. Make sure you’re able to pay the loan back quickly and only spend the amount you borrowed on necessary expenses. To minimize your risk of default, always compare different loan offerings and consider using an online calculator to determine how much a lender’s loan terms will cost you in the long run.
Special Opportunities
Cash loans come in a variety of forms and are available through many different financial institutions. Generally speaking, they are short-term lending solutions that are often offered with special promotional periods in which the borrower does not owe any interest. It is important to note that the loan must still be repaid within the specified time frame. However, it is a great option for borrowers with no credit or low credit scores who need access to money quickly.
While cash advances may seem like an easy solution for emergency expenses, it is important to fully consider the fees and rates associated with these types of loans. If you are able, it is best to stick with personal loans or credit cards instead of cash advances. They are typically less expensive and provide a longer repayment term, allowing you to pay off your debt faster.
In addition, it is helpful to prioritize paying off a cash advance on time to avoid incurring any additional interest charges. There are several ways to do this, including selling items you no longer need or engaging in a side hustle to help with repaying the loan. These strategies can also help to build good credit in the long-term. In addition, be sure to only work with reputable lenders that are licensed in your state.
Down Payments
Often, large expenses require a big chunk of cash all at once. A down payment on a new car or a home, for example, increases affordability up front and may help avoid costly mortgage insurance, as long as you don’t stretch your budget too thin in the process. Rather than borrowing from payday loan companies or putting it all on your credit card, consider working with a financial institution that offers personal installment loans. Reputable lenders check borrowers’ income, credit report with all three credit bureaus and existing debt before approving them for financing. They also offer competitive rates, and most don’t charge prepayment penalties or balloon charges.
A personal installment loan can be a great alternative to payday loans and can even help you improve your credit history if you pay it back on time. But you’ll need to take the time to do some research and find a lender that’s licensed in your state.
Alternatively, you can borrow money from family members who are willing to give it to you – although you’ll need to create a formal repayment agreement to keep your relationship on good terms. Borrowers can also work with a community development credit union or a non-profit financial cooperative that may provide small loans to qualified borrowers at affordable interest rates. They might not have the speedy approval processes of private lenders, but they usually have more flexible credit requirements and can offer more affordable rates than payday or cash advance lenders.