Borrowing cash quickly can be a lifesaver when you’re facing financial difficulty, but the key is making sure you get an advantageous deal.
Payday loans can be costly and could charge as much as 400% in annual interest. That is why it’s essential to explore other options before borrowing from a payday lender.
Payday loans
Payday loans are short-term cash advances that borrowers can use for unexpected expenses. They’re commonly available at payday loan stores, check cashing establishments and pawn shops.
Borrowers typically need to repay their loan within two weeks. If not, additional fees will be applied and this could add up quickly, creating a debt spiral which could eventually lead to long-term damage to their credit rating.
Instead of payday loans, borrowers should explore alternatives that don’t carry high interest rates or fees. These could include credit cards, peer-to-peer loans and local charities and churches.
Secured loans
If you need money for a house, car or other expensive items, a secured loan could be the answer. This type of loan is secured against an asset like your home and the lender has the right to repossess that property if you fail to make payments.
Secured loans tend to offer more flexibility than unsecured ones, making them accessible even to people with less-than-perfect credit. Secured loans can also serve as a good way to build your credit history so you can access better terms the next time you need a loan.
When considering a secured loan, make sure you understand its risks and advantages. Furthermore, take into account your personal financial situation and how long you need to repay the loan. Moreover, create an extensive application package including income information and debt obligations; remember, one late payment or default can damage your credit score significantly.
Friends and family
Borrowing from friends and family can be a lifesaver for many borrowers. Not only does it cover emergency expenses, but it also allows borrowers to avoid high interest rate loans and even give themselves the financial freedom to start saving money.
However, it’s essential to carefully consider whether you can afford the loan and what could happen if you don’t. Not having enough money can put a strain on relationships as well.
To make a friend or family member comfortable lending you money, create an agreement that clearly states how much is borrowed and when it must be returned. This way, both of you will feel confident.
Friends and family can be an excellent source of financing for entrepreneurs, particularly during the early stages of raising capital. Some new companies issue shares to their friends and family in order to generate seed money that they would not have been able to secure through more traditional means.
Food delivery
Food delivery can be a great solution if you’re in need of an easy meal or trying to stay within budget. But if your spending habits have become out-of-control due to your delivery habit, it’s time to take control over your spending and stop the addiction.
Food delivery businesses come in many forms, from platforms that partner with restaurants and drivers to fully integrated models where everything is done on-site.
In the Platform to Consumer Model, third-party apps connect customers to local restaurants through their website or mobile app. They list available restaurants and take a 20-30% commission from each order placed.
While these companies provide new revenue streams for restaurants, they can also put restaurants at a disadvantage. They charge high commission rates, don’t share data with restaurants, and are costly to operate.
