Getting cash up front can seem like a good idea in a time of crisis. When you come across unexpected expenses that need to be paid immediately, getting some money together as quickly as you can may seem like your only option. Many people pursue short term cash loans, but there are other alternatives as well. Here are what short term cash loans involve and some other options that may work better for you.
Short Term Cash Loans
These loans can be obtained from a payday lending institution. You are customarily able to pay it back the next time you get your paycheck. Many Americans use these occasionally, and there are pros and cons to each. These cash loans can help you as a short term fix when you’re facing financial distress, but also can have major drawbacks. Keep this in mind when considering a short term loan.
- You get cash quickly and when you need it, up to $500 in most states but up to a thousand in others.
- A loan paid back on time will not face any additional fees or interest.
- High Interest Rates
The interest rates on these types of loans are customarily very high, which makes them easy to get out of control. Interest calculations with these types of loans allow for compounding, which increases the amount that you owe exponentially.
- Loan Extensions
Believe it or not, if you need to get an extension on your loan, you may have to pay extra fees. That is how companies like these make money and stay in business. On top of that, with terms and conditions written in fine print that can change from state to state, these fees can be added on in the case that you need to extend your loan and make it even more difficult to pay back. The fees are charged on top of interest.
Different Types Of Loans And Alternatives To Short Term Cash Loans
Credit Union Loans
Credit Unions serve their communities and saw the need for payday loan alternatives. Members can borrow up to $500 a month, replaced with their next paycheck and connected to a SALO cash account which creates a rainy day fund from 5% of the loan. Not every union offers these programs, but many do.
Small Bank Loans
Banks are starting to offer alternatives to payday loans as well. The FDIC started its Small-Dollar Loan Pilot program in 2008 that have 31 banks in the U.S. offering loans up to $1,000 that have interest capped at 36% as well as payment periods that go beyond your next paycheck.
While credit counseling will not necessarily help you get money fast, speaking with a counselor can help you organize your finances, putting you less at risk for needing cash fast in the future. Some services offer free help with money management that includes budget counseling and debt management planning. Find a good agency by visiting the National Foundation For Credit Counseling website to learn what you can do to help manage your money.