What Types Of Emergency Cash Loans Are There?
There are many different types of emergency cash loans available. These include the following:
Many payday lenders offer emergency cash loans with short-term loan terms (usually around two weeks). The contract typically states that the borrower will need to repay the loan in full on their next payday. However, in addition to paying back the total principal amount, borrowers will also need to pay interest at this time. Payday loans are notorious for their sky-high interest rates (commonly up to 400% APR). Consequently, payday loans may cause more harm than good if you are in a financial bind.
Personal loans are a type of unsecured loans meaning that you do not need to put up any collateral. For that reason, the amount you can borrow is typically less than with secured loans. The majority of personal loans operate with a monthly repayment scheme which will be determined, along with the length of the loan term, by the lender and borrower before the loan is approved.
Home equity loans
Homeowners can use a home equity loan or home equity line of credit, a type of secure loan that uses your house as collateral. Due to the low risk for the lender, loan terms are typically agreeable, including fairer interest rates and a longer repayment period. However, if you default the loan, the lender could repossess your home.
Credit card cash advances
Those who have a credit card and need fast access to funds may be able to take out a cash advance. They can usually do this at a bank, credit union or ATM, providing them with instantaneous funds.
However, cash advances usually incur an expensive upfront fee and high-interest rates. Additionally, if your cash advances cause a surge in your credit utilization rate, it can negatively impact your credit score.
Title loans are a type of secure emergency cash loan enabling borrowers to use their vehicle as collateral.
With title loans, the lender will hold on to your car title and lend you a certain amount. In the meantime, you are still able to use your car. However, if you default on any loan payments, the lender could repossess your car.
Although they provide quick access to funds, they also incur high-interest rates and the risk of potentially losing your vehicle should you default on payments.