If you need short-term cash, there are plenty of options. Loans can help cover expenses like car repairs or unexpected bills.
However, it’s essential to exercise caution when borrowing this type of money. These loans often come with high interest rates and fees which could put a strain on your budget.
Payday Loans
If you need short-term cash and have bad credit, payday loans could be your answer. Although these non-credit check loans don’t require a credit check, they come with high interest and fees that could spiral into an expensive cycle of debt.
Many rely on payday loans to make ends meet when they don’t have the money in a particular month. Unfortunately, these loans usually carry high-interest rates and have strict repayment deadlines, making it difficult for borrowers to repay their debts.
You may be eligible for a payday loan from your bank or other financial institution, but they’ll require proof of income in the form of pay stubs. Once approved, they’ll give you part of your next paycheck to cover both the loan amount and interest charges. Note that some states prohibit payday loans entirely – make sure to research the laws in your area beforehand.
Credit Card Advances
If you need quick cash, credit card advances may be an option. However, they come at a high cost and should only be used as a last resort.
It is essential to be aware that a credit card advance can have an adverse effect on your credit score. Even if you pay off the balance quickly, a high interest rate could impede timely payments and raise your credit utilization ratio.
If you’re worried about high interest rates and fees, consider taking out a low-interest personal loan or using your credit cards instead of cash. Additionally, creating an emergency fund is another great option to help cover unexpected expenses.
Lines of Credit
A line of credit (LOC) is a debt product that gives you access to an escrow pool of funds you can borrow from at any time. It can help cover unexpected expenses, emergency repairs and temporarily fill cash flow gaps.
With a line of credit, unlike loans which provide one lump sum and require immediate repayment, you only pay back what you borrow. This allows for lower fixed interest rates than those found with credit cards.
Different lines of credit exist, each with their own advantages and drawbacks. Before applying, it’s essential to assess your personal situation and plan how you plan to repaid any borrowed funds.
Merchant Cash Advances
If you need short-term cash, a merchant cash advance (MCA) might be your answer. These types of loans can be helpful for businesses that require funds for unexpected expenses like renovations or expansion projects.
MCAs can also be advantageous for businesses that experience difficulty borrowing from traditional lenders due to poor credit or other reasons. They generally require less documentation and usually make a decision within two days.
Repayments are calculated based on a percentage of each customer card transaction. This means your repayment amount may rise or fall according to the growth in sales of your card.
Repayment periods can range from three to 18 months, with most Mortgage Credit Agreements (MCA) requiring you to repay the advance within six to 12 months. Repayments can be automatically deducted from your business bank account or you can agree on an ongoing fixed repayment amount that is calculated based on an estimated revenue stream.
