Emergencies by their very nature can strike you at any time. Financial urgencies can be anything from medical requirements to mounting credit card debts. When the amount you need is more than your savings, you know your only option is to borrow money. Luckily, lenders these days offer quick loans to help consumers meet their short-term cash requirements. However, not all lenders will play fair when you are in desperate need. Sometimes they may charge you exorbitantly high interest rates just to take advantage of your situation.
When you are distressed with your situation, the last thing on your mind will be to compare quotes from different lenders. However, it is important to think this through to avoid being sucked into a predatory loan trap.
Fortunately, there are lenders that can help you get cash at a moment’s notice and that too without exploiting your desperate situation. Which lender you choose eventually will impact how quickly you can get the money and what costs you will have to bear. Here are some important tips to help you meet your cash needs without falling prey to predatory lending practices.
- Choose Personal Lenders That Offer Quick Approvals
When you want to get cash today and that too at an affordable interest rate, you must consider choosing a personal lender. These lenders usually take no more than a day or two to process your application and release funds. However, you should have a solid credit rating to qualify for these type of loans. You would also be required to provide your identification and income proof to complete and submit your application quickly. While the rate of interest will vary from borrower to borrower, these loans usually charge 10 – 15% interest. Most personal loan service providers also charge an origination fee of up to 5% of your loan value.
- Borrow From Friends Or Family Members
If you have a reliable network of friends and family members that you can fall back on in your hour of need, then they are the quickest and the safest way to meet your cash shortfall. Discuss your situation with the friend/family member and come up with a repayment plan that is acceptable to both of you. You should also confirm with your friend/family member if they would want you to pay interest. It is also advisable to get a promissory note signed for the loan. When you enter an agreement with clear intentions and expectations, it not only helps protect the lender’s finances but also personal relationships.
If you have an extremely urgent financial need that must be met at a moment’s notice, then you can also borrow from your friends and apply for a personal loan that can be used to pay them back.
- Use Your Credit Card
Credit cards can be extremely helpful if used the right way. You can use your card’s available line of credit to fund your immediate cash requirements. You can either swipe your card to pay for the urgent expense or consider using the cash advance facility.
Cash advance is very simple to use. You can use your credit card like a debit card to withdraw money from the ATM. Some providers may even allow you to make a transfer to your personal account which you can later withdraw from your debit card linked to the account.
Before you use this option, you must remember that using cash advance facility on your credit card attracts an exorbitant fee between 3 and 5 percent. Above that, you will also be charged the average interest of 2% or more, depending on your credit card company policies. The balance that remains unpaid will continue to accrue interest until it is paid in full. It is due to this reason many experts advise you against using the cash advance facility on your credit card until it is absolutely necessary.
Apply For Secured Loan
Some people may not qualify for a personal loan or credit card due to poor credit score. In this case, a secured personal loan is often the only alternative.
A secured loan is issued against collaterals such as 401k, car equity, mortgage, etc. This may not be the fastest way to get money, but it is often the surest way, especially if your credit scores are low. However, if you fail to make the payments as per your repayment plan you risk losing your asset.
The option you choose ultimately will depend on the urgency of your requirement. It is always better to know all your options to make a sound decision when the time comes.