If you need money for unexpected expenses or emergencies, there are plenty of solutions available near you. These include payday loans, personal installment loans, pawn shop loans and more.
Many borrowers struggle with frequent money shortages and turn to small cash advances as a way of managing their budget. Unfortunately, these loans often come with high interest rates and fees that could eventually lead to debt accumulation.
Payday Loans
If you need money quickly and cannot wait until your next paycheck, a payday loan may be an option. Unfortunately, they tend to be expensive and can put you into an endless debt cycle.
Payday loans often carry high interest rates and short repayment periods, so they should only be used as a last resort. Furthermore, they are subject to numerous state laws and regulations so be sure you are familiar with them before taking out a payday loan.
When applying for a payday loan, lenders will review your personal information and income. Once approved, they can deposit the funds within 24 hours.
Pawn Shop Loans
Pawn shops are a quick and convenient way to obtain cash for emergencies. But they may be costly and risky if you don’t know what you’re getting into.
Pawn shop loans are loans based on the value of an item you offer as collateral. You can borrow a set amount of money, usually for 30 days or longer, but must repay it within that period.
A major disadvantage of pawn shop loans is that you must pay high interest rates and finance charges. For instance, if you pawn a gold ring worth $400 and repay it within 30 days, the resulting annual percentage rate (APR) could be as high as 182%.
If you need money quickly, credit cards or a personal loan could be suitable options. These typically have lower APRs and are safer for your credit score. Furthermore, personal loans may be ideal if building credit is your goal since these types of loans don’t affect credit scores.
Secured Loans
A secured loan is a type of personal loan that requires you to pledge an asset (such as your car, house or savings account) as collateral. This protects the lender in case you default on payments.
Bank and credit union loans may be more cost-effective than unsecured personal loans, with potentially better repayment terms.
Rates for secured loans can vary significantly depending on which bank or credit union you select and your collateral requirements. Be sure to shop around before making a decision in order to get the best possible deal.
First Tech Federal Credit Union offers high loan amounts and low rates on secured loans, though they do require a minimum credit score to qualify. Another option is applying for a savings account or certificate of deposit (CD)-secured loan from your credit union.
Student Loans
Student loans, along with scholarships and grants, are the main ways people finance their college education. However, unlike grants and scholarships which usually offer a fixed amount of money, student loans must be paid back – usually with interest attached.
Federal student loans are available to both undergraduate and graduate students, based on financial need. The government pays the interest during your time in school as well as during a six-month grace period after you leave.
Federal student loans tend to be cheaper and have more accommodating repayment terms compared to private ones. Plus, they provide flexible payment plans as well as the option of deferring payments while in school.
Your rate will depend on both your credit score and the lender you select. Rates can range from low fixed rates to variable ones that fluctuate over time, making it important to shop around for the best student loan deal possible. By being informed about different student loan types and their associated interest rates, it will become much simpler for you to select one that is suitable for you.
