Lots of middle-class Americans use short-term lending products. Why do people apply for these loans so often? In this tough economic situation people often find themselves severely short on cash. Therefore they consider short-term loans to be a way-out of difficult financial situations.
Such loans are not intended to cover some big purchases as a car or a house, they used to cover some small temporary expenses. Still short-term loans do not belong to secured ones, therefore most of them have high interest rates. Thus, knowing about all ups and downs of these loans will simplify your future practice.
Short-term Loan Types:
Personal loan is an unsecured loan which can be given out by any lending institution or individual. Generally interest rate is quite high, sometimes a process of repayment can be divided into several parts for paying back, or it may be paid out fully.
Payday loan is even easier to obtain than a personal loan. Lenders of payday loans lend money even to people with damaged credit history, so bad credit is not a problem. In case your application is approved, you will be able to get money within 24 hours. These lending options are offered mostly by online lending companies and direct lenders. But it’s worth to keep in mind that interest rates on such loans are usually high enough and if you can not pay back on time then you will have to pay penalties. It’s better to use this service only in case there’s a financial emergency and really urgent need of cash.
Credit cards are used by lots of consumers. With a help of a credit card it’s possible to pay for casual expenses and purchases. There’s an interest-free period, and it’s important to get in time, otherwise you will have to pay off the interest rate which can be high enough. So it’s not recommended to put all your expenses on plastic and use cash to have a healthy budget.
Credit card cash advance is a loan provided by your credit card company. You already know your company, who you deal with and company employees know you therefore you have got some interpersonal relations. To get cash with a help of such loan you will need to take out some money from your credit card at ATM. Credit card cash advance has a big fee and with an interest rate it may charge a lot.
Do not think that if you have taken out a short-term loan then you may not pay for a debt for a bit of time. Do no think so in any way. Try to pay back as soon as possible. If you don’t and miss any small payment then there’s a risk to get big penalties and get into the debt hole. Keep in mind that these loans have quite high interest rates and it will be better for you if you will pay it off faster. Think if your budget allows you to pay off the debt in time and there will be no need to get another loan to stay afloat.
