Simple Ways To Access Extra Money When You Are in a Financial Bind

A Guide to Personal Loans

personal-loansNobody wants to be in a position where they owe more than they can afford. However, unexpected obstacles inevitably arise more often then we'd like. Whether it's unanticipated medical issues and related expenses or a sudden death in the family, the moral of the story remains the same: life happens, and it can very quickly become financially overwhelming.

When there's an emergency expense and you don't have the resources to take care of it, you need to start looking for options. For some, that might be a cash advance on a credit card. For others, it might involve going to a relative or friend to borrow cash.

The next place to turn for many is Google, where a quick search of "cash loan" immediately generates literally hundreds of different online direct lenders, many of them offering things like payday loans and others offering different types of online installment loans.

With so many alternatives available, it may be difficult to navigate the options and determine what kind of loan makes sense for you. Equally important, once you decide what type of loan is suitable, you need to figure out which lender you should turn to. Below are examples of some options available, as well as some tips on what to look for in choosing a lender that is right for you.

What is a payday loan?

Payday loans are short-term loans that you pay back with your next paycheck. They consist of a relatively small amount of money, usually $500 or less, lent to a person looking for immediate access to some extra cash. A payday loan typically charges a high rate of interest, with terms that require repayment on your next pay date, and sometimes with the repayment deducted directly from your next paycheck.

They are a simple and convenient way to access the extra money you need when you are in a financial bind if you don't have funds available currently but can't wait for your next paycheck.

Payday loans are a great resource for those who need immediate financing, however it's important to remember that this is not free money. When you apply for a payday loan, you should consider the amount of interest that you will be charged, and you should always only borrow what you can afford to pay back with your next paycheck.

You should also bear in mind that once the repayment of the loan is accounted for, you will have less of your next paycheck available to you so it is critical to budget accordingly.

How and where can you get a payday loan?

A payday loan can be acquired at a retail store or directly online. For many lenders, you meet most eligibility criteria for a payday loan if you have a physical address, a job and a bank account. It's really that simple. One of the benefits of a payday loan is that it is not tied to any of your assets, it's simply an immediate loan that can help you to get out of a bind.

What is the difference between online versus retail store payday loans?

If you do not want to commute to a physical retail store, or if there isn't a store nearby, then online payday loans are a great option for you.

Online payday loans may also avoid some of the hassles associated with traditional retail store payday loans. You may not need to send any documents by fax or mail to get the money you need. This is why many view this as the hassle-free version of applying for a payday loan.

However, some people are still more comfortable going into a store and speaking with someone directly, especially when it involves borrowing money. This approach is particularly helpful to those borrowing for the first time and/or those that would like to speak to someone face-to-face before agreeing to a loan.

That said, many online loan providers offer virtual assistance via online chat and/or provide a phone number you can call to get additional information, making the experience that much quicker and easier, even when you are applying from the comfort of your own home.

What should you be looking for when researching where to apply for and get a payday loan?

Before you get a pay day loan, you should research the potential lenders. To protect your rights, make sure the lender is licensed. Do not take out a loan unless the lender asserts that they are state licensed and displays their authority to operate. Beyond that, check out the reputation of the lender to ensure you are comfortable borrowing from them. There are plenty of companies that do business as direct payday lenders but are not state licensed, and therefore not compliant with state-level consumer protection laws.

How does a payday loan compare to other options like an installment loan?

Installment loans differ from payday loans because they are based on a set number of scheduled payments to be paid back over a specific period of time, with interest

The major difference between installment loans and payday loans is the repayment schedule. Some people may prefer a longer repayment period which spreads the cost of the loan over a greater amount of time while others may prefer to repay the loan right away.

Even if you borrow in the form on an installment loan, if you are looking to pay off the loan sooner, many lenders allow for early repayment or additional payments on top of your scheduled installments without a penalty. That being said, be sure to check the terms and conditions prior to signing a loan agreement as some lenders may impose a penalty if you pay off your installment loan earlier than scheduled.

When and how to use Short-term Installment Loans

Similar to payday loans, installment loans are meant for short term, unforeseen emergency expenses, such as medical bills, an unanticipated home or car repair, or even an unexpected trip to visit an ill or dying friend or loved one.

One caveat that applies to both installment and payday loans: do your research to ensure you know who you are borrowing from, what the terms of your loan are and what the options – and potential consequences – are of not paying back the loan on time.

Additional Options - What to do when you need a little more cash flow.

There are additional options available for those who are looking to borrow money. Most of the following are situation-dependent options, meaning they may not be available to everyone, but they are viable options for those who have access to them.

  1. 1. Get a personal line of credit. A line of credit differs from a loan because it allows you to have more control over your cash flow. If you are approved, a line of credit gives you access to the funds you need when you need them, up to your available credit limit. You only need to apply for a Line of Credit once and if approved, you are free to use any amount up to your credit limit as you see fit. You will pay interest and/or fees on the amount of money that you use, and may also pay a fee for each withdrawal or advance you make on your Line of Credit. You can withdraw additional funds at any time so long as you have available credit on your Line of Credit and your account is in good standing.

  2. 2. Ask a family member or a friend for help. This option could save you from paying interest and/or fees on the money you borrow, depending on the arrangement. However, mixing family and finances can be difficult for anyone, particularly if you're in a short-term pinch. That said, it is likely the fastest and least expensive way to cover a short-term money problem – and it most likely comes with more flexible repayment terms.

  3. 3. Lock in some extra income. This may include overtime if you're paid hourly, or an extra part-time job if you're on a salary. If a second job is a little too much commitment, you could also start a small side business where you could pick your hours. This could include sewing and selling pillows or teaching guitar in your free time. Either way, it's using your skills for some extra money.

  4. 4. Sign up for overdraft protection. Overdraft protection allows account holders to temporarily overdraw on their account and make debit transactions within an approved overdraft limit. For some, having overdraft protection provides piece of mind because it takes a bit of pressure off worrying that a rent or telephone payment won't go through. Overdraft protection comes with fees and you may find that you end up constantly drifting in and out of a negative balance. Some people prefer to just get a loan and pay whatever new expense they may have incurred in full, but overdraft protection is a great alternative for those that like to have a 'safety net'.

  5. 5. Ask for a cash/salary advance. Depending on the industry you're in and the company you work for, you may be able to ask your employer for a cash advance. Most people save this type of option for serious situations, but it's up to you to judge what you're comfortable with. Keep in mind that an advance is not free money, it's simply getting your money earlier. Again, budgeting your future expenses and making sure you can cover them off with a smaller paycheck or no paycheck at all in the future is critical.

Additional Resources:

MoneyKey Installment Loans, Payday Loans and Lines of Credit: https://www.moneykey.com

Payday Loans: Frequently Asked Questions: http://www.familyresourcealliance.net/payday-loans

Payday Loans Online Resource: http://paydayloansonlineresource.org

How it Works: https://www.moneykey.com/how-it-works.php

Access a MoneyKey Line of credit: https://www.moneykey.com/line-of-credit-loans-online.php

Online Payday Loans – Important Things to Know: http://paydayloansonlineresource.org/online-payday-loans-important-things-to-know

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