Written by: Jakob Jelling
A common problem for many people needs a small amount of cash
quickly for a short period of time. The loan may be needed for
many reasons such as home or vehicle repairs, a medical expense
or perhaps you have an opportunity that you can not pass up. If
you find yourself needing some money for a short period of time
what are your options?
The most common solution is a cash advance loan or a pay day
loan. With a cash advance loan you visit a company that gives
you the money that you need and you promise to repay them that
amount plus fees and interest on your next pay day. While this
is becoming a popular option due to its connivance it really
should be your option of last resort. Payday loan companies are
out there to make money and they do so by charging extremely
high interest rates.
If you find yourself in a cash emergency and have a little time
available there are several other options that are available to
you. If you have reasonable credit than your first option should
be your bank. In days gone by you used to be able to get a god
faith loan from your bank. Your name and reputation was all that
was needed for a small loan and with a handshake you could get a
few hundred dollars. This option is no longer there but there
are other services that you may be able to use.
The fastest solutions from a bank include applying for a credit
card or a higher overdraft on your accounts. Most credit card
applications and overdraft applications can be processed while
you wait. If you do not need cash that day then you may wish to
pursue a line of credit or a small personal loan while you are
at your bank. To save yourself time and trouble make sure you
have a recent pay stub, a utility bill with your current address
on it, proof of income and employment, car insurance papers, a
check and your spouse with you. Having all of this together may
allow the bank to process and approve you loan on the first
visit.
If you have a little more time then another option available to
you is your 401K plan. If you are to directly withdraw money
from your 401K plan then you will be taxed heavily on it and may
be disadvantaging yourself later in life. However if you make
arrangements with your employer to repay the amount withdrawn
then this is not true. When you arrange to repay the deduction
you are not taxed nearly as heavily on your withdrawal and
although you will loose some interest in the long run it is much
better than retiring without repaying the debt.
If you do not wish to utilize you 401K plan then your next best
option is a third party lender. A third party lender can process
your loan application and give you a check the same day. Third
party lenders will charge more interest than a bank but it is a
fraction of what a pay day loan company will charge. Most third
party unsecured loans with average FICO scores are less than 20%
while a pay day loan company charges and average of 600% for
their loans. The amount available will vary with lenders but
most companies will not lend less than $750. If you find that
you only need $300 and the lowest amount you can borrow is
$1,000 then makes sure that you apply all or at least 80% of the
unused amount on the loan. The faster you repay the loan the
better it is for you.
If you have a cash emergency there are various options available
to you depending upon how much time you have. Be sure to
carefully consider your options before deciding to use a pay day
loan company. With a little work you may be able to secure a
loan for the amount that you need within 2 days at a reasonable
interest rate.
About the author:
Jakob Jelling is the founder of http://www.cashbazar.com. Visit
his website for the latest on personal finance, debt
elimination, budgeting, credit cards and real estate.