1) Payday or cash advance loans
2) Title loans
3) Borrowing money from someone you know
In this article, which is the first in our series titled the “Guide to Getting Immediate Cash Loans”, we will discuss these options, giving the basics behind these loans – and hopefully helping you to understand your options for a quick cash loan better.
Option 1 – The Payday or Cash Advance Loan
There is some confusion as to what exactly is payday loan, and if there are any differences between a payday loan and a cash advance loan. First off, there is not really a difference between these two types of loans. Both of them are unsecured, high-interest, short-term loans which require you to pay them back by your next payday (hence the name, payday loans). They are NOT meant to be revolving lines of credit or long-term financing, which is where some people get confused.
Essentially, these loans are meant to serve as an emergency cash advance. For example, say your car breaks down and you have no way to get to work unless it’s fixed, but you don’t have any money to fix it. In this case some people might use a payday loan to get the cash now, fix the car, then pay the loan off a week or two later when their paycheck came in. However, before you take such a loan make sure you understand exactly how they work.
To summarize what a cash advance loan is:
- Short Term Financing Option – most loans are offered for a 2 week time period. In some cases they can be extended between one and three times (each lender has there own options).
- Unsecured Loan. You do not have to post any collateral to take out a payday loan.
- Can borrow up to $5,000 – although most states have limits much lower than this, so if you need this much you will have to search the internet to find a lender willing to make that loan (however, be sure to read the rest of our guide before thinking about taking a cash loan online).
- Bad Credit Loan – most people who take out these loans are people with bad credit. Since no credit checks are required this is sometimes their only option for fast cash financing.
- High Interest Rate Loan – the rates for payday loans are the highest in the financial industry, with average rates above 450% APR.
Remember, these loans are only supposed to be used in times of emergencies, and most consumer advocate groups advise to stay away from them all together.
Options #2 – Title Loans
Title loans are another option for immediate cash needs, and they are not much different than payday loans, with a few exceptions. Title loans are also emergency financing options that are designed to be paid back within a short time period – usually 31 days. Their structure is much like that of the payday loan – they are made to often made to bad credit borrowers, as no credit check is required; they have high interest rate costs that average in the triple digits; and are also meant to be made for short-term needs only.
However, where title loans differ from payday loans is that they are not unsecured loans. Instead, you secure the loan with your car title – as in, if you don’t pay the loan back then they can repossess your car. To find the amount that they will lend against the car the lender will take the value of the car and subtract the amount you owe on it. That value is the equity, and the lender will allow you to borrow a certain percentage of that equity.
Option # 3 – Borrowing Money From A Friend or Family Member
This is by far the cheapest way to get an immediate cash loan, as long as you measure the cost strictly in terms of dollars and cents. Obviously, the terms of such family cash loans will differ greatly. However, the true risk behind these loans is generally the same – you run the risk of ruining an otherwise healthy relationship. Because of this, make sure you balance this risk with the potential benefits (cost savings, more flexibility in case you can’t pay the loan back, etc.), as sometimes it’s just not worth the savings.
Summary
These are your three main options when it comes to getting cash today. Obviously, if you do need an immediate loan then you are not going to be able to walk into your nearest bank, especially if you have bad credit. As such, your options are limited and you can expect to have to pay more for these types of loans.
In our next section, section II of our “Guide to Getting Immediate Cash Loans” we will discuss the requirements of immediate cash loans.