When your cash runs out, you need to find a way to get the funds quickly. But not all options are equal–and some could actually cause damage in the long run.
Thankfully, there are several ways to raise cash without going into financial difficulty. But some options may not be suitable for your particular circumstance, so do your due diligence before making a decision.
Online Lending Brokers
Entrepreneurs with a new venture or homeowners in need of financial assistance have plenty of lenders to choose from. Online lending brokers can connect you with the ideal loan programs tailored to your individual situation.
Small Lender Networks: Brokers often have access to various lenders, such as banks and credit unions. This enables them to compare rates and terms from various providers in order to find the most suitable financing for your individual financial profile and business objectives.
Fees: Some brokers charge upfront fees for their service, while others may not. Typically, a broker’s fee will be an amount that corresponds to a percentage of your loan amount.
The ideal broker should be upfront about their costs and offer a wide selection of financing options. Furthermore, they should be able to provide two or three references from businesses they’ve assisted in the past so you can get an idea of the quality of customer service provided by a firm.
Payday Loans
If you need money now, payday loans could be the ideal solution. They’re offered by check-cashing stores, pawn shops and some banks.
Payday loans are unsecured personal loans of $500 or less that must be paid back with your next paycheck. They’re often the last resort for those with poor credit and often come with high interest rates and fees.
Payday loan borrowers typically use these loans to cover recurring monthly bills such as utilities or rent. Unfortunately, when they can’t afford to repay their loan on time, they may need to take out another one or pay a fee to “roll over” the old loan for two weeks.
It can quickly spiral into a cycle of debt. According to a Pew Charitable Trusts study, the average payday borrower ends up spending $520 in fees on top of their original $375 loan.
Credit Card Advances
If you have a credit card and need cash now, it may be tempting to use that for this purpose. However, remember that cash advances on credit can be costly, so these should only be used in extreme emergencies.
Credit card advances are a type of short-term loan with high interest and fees attached. They’re generally considered unwise for most people, and should be avoided at all costs.
Decide if a cash advance is right for you by carefully considering all your options and making sure that you’re getting the most value out of your money. That could include researching alternative credit card options that might better suit your needs and budget.
Another option is a low-interest personal loan. These typically have lower interest rates than credit cards and allow you to manage payments over time more easily. If unsure which option is best suited for your situation, consulting a professional may be beneficial.
Home Equity Loans
Are you in need of cash quickly? A home equity loan might be the ideal solution. These loans offer financial assistance with various needs such as renovating or improving your home, consolidating debt or paying off education-related debt.
Home equity loans have many advantages, but they also come with some drawbacks. For instance, they could make selling your house more challenging if you suddenly need to relocate or the market declines in your area.
Another potential drawback of HELOCs is that they can be costly. Interest rates on these loans tend to be lower than those offered by HELOCs, but you must still pay closing costs and other charges as well.
A home equity loan may be suitable for someone in need of a lump sum of money, but you should carefully weigh your finances and other options before deciding on this type of financing. If you’re uncertain, speak to an expert to learn more about its pros and cons.
