When in need of fast cash, there are several options available to you. Unfortunately, some are more costly and less beneficial than others.
Payday loans are a popular choice among those needing quick access to funds. They have flexible payment terms and are simple to apply for, though their interest rates may be high.
A payday loan is an unsecured loan that must be repaid in two weeks or less. Customers often use them to cover recurring monthly expenses like utilities or rent.
Loans may also be used for unexpected expenses like car repairs or medical care. They’re available both in stores or online, with all you need to apply being identification and your most recent pay stub.
However, they can quickly become a budget busting expense that leads to debt accumulation for many people. Many charge high interest rates that may be nearly three times the rate offered to those with good credit scores.
Pawn shop loans
If you need cash quickly, pawn shop loans may be your answer. These short-term loans are secured by collateral – typically some type of valuable item brought into the store.
Pawn loans can be obtained for virtually any item, from electronics to jewelry and sports equipment. The pawnshop will assess the item’s resell value and grant you a loan based on that assessment.
Unfortunately, interest rates on mortgages tend to be quite high. Depending on where you live, you could end up paying 10% or more per month in interest payments.
Money loans should only be used as a last resort and should only be used temporarily to address financial emergencies. If you find yourself needing money frequently, other alternatives such as credit cards or peer-to-peer lending might be more suitable.
Bank or credit union loans
Bank or credit union loans can be a fast and simple way to get money when needed. But before making your decision, take some time to research which institution best fits your needs.
Credit unions tend to be less expensive than traditional banks and offer more personalized service. The downside is that you may need to visit a branch or wait for your loan application to be processed.
NerdWallet suggests making a list of credit unions in your area and then comparing their interest rates, repayment terms and fees to determine which one offers the best personal loan options for you.
Personal installment loans
Quick money lenders provide personal installment loans to meet a range of financial needs. They’re commonly available at banks, credit unions and online lenders and can range in size from the upper hundreds up to thousands of dollars.
These loans typically feature a fixed interest rate and repayment schedule. Many also provide prequalification tools so you can select the most suitable loan without impacting your credit score negatively.
Loans can be especially helpful for purchases that are too large to pay in full, such as a car or home. Some loans may even be offered at the point of sale, like a buy-now, pay-later loan.
Hard money lending
Hard money lenders are private investors who provide short-term funding to borrowers using their assets as security. They’re frequently utilized by real estate investors, house flippers and developers who require extra capital for their projects.
These lenders are not subject to the same regulations as traditional finance institutions, meaning they can accept borrowers with varying credit scores and debt-to-income ratios.
They can also be more flexible with the terms of their loans, enabling a faster turnaround time and less stringent approval criteria.
Hard money loans tend to carry higher interest rates than financing from banks or government programs, yet they are easier and faster to acquire than other methods of capital access. Nonetheless, hard money lending may not be suitable for everyone; thus, caution should still be exercised when applying.