Options for emergency loans
The finance industry has greatly reduced borrowing opportunities for millions of consumers. Those in need of emergency cash certainly have fewer options than in years past. Today, options for borrowing money online remain centered on four types of lending programs. Payday or Cash advance loans are available in most, but not all states. Personal and signature based loans, credit card cash advance loans and a newer phenomenon called social lending clubs. The options to borrow money online can provide an easy and quick alternative to addressing your emergency cash needs and the various loan options each have their advantages and disadvantages for borrowing money.
In reviewing borrowing options, the loans that tend to offer the best rates are considered signature loans. These are loans that are offered typically through a bank or credit union that allow a customer to borrow between $500 to $25,000. These loans tend to take over 48 hrs to process and the underwriting process generally includes a thorough review of the borrowers credit profile. Signature loans are often based on a borrowers employment status and credit profile, but have the advantage of lower interest rates and more favorable payment terms to help borrowers achieve a manageable payment.
Social lending sites offer personal loans to borrowers, typically in amounts of $1000 up to $25,000. The peer based lending programs have been available for at least five years and are becoming increasingly popular as the finance landscape changes. The ability to borrow money is also based on credit and income, but the underwriting and approval process is not as black and white as a typical lender. These loans are available as investors pool their money into larger groups at a requested rate of return. The more potential risk, typically leads to higher interest rates being offered to the borrowers. Investors help to minimize their risks by spreading their loans across multiple borrowers, in some cases with as little as $25 in principle exposure.
Credit card cash advance loans have been available to borrowers for many years. Borrowing against ones credit card is often an easy alternative to obtaining cash in a hurry. The challenge is credit card companies restrict the amount of money available on a cash advance and the process of applying for new credit cards online can still take up to 7 days for full approval and access to a new credit card. Rates on cash advances for credit cards tend to be over ten percent with most lenders.
Payday and cash advance loans are often the last avenue a borrower will pursue to obtain emergency financing. These loans which are available in most states often are processed without a credit report, benefiting borrowers with little or poor credit history. The loans are generally offered to borrowers who pledge their future paychecks as collateral for the new loan. Payday loans are a convenient way to access cash for an emergency, but the disadvantage is they often have interest rates well above ten percent and can quickly become habit forming to consumers who are living paycheck to paycheck. Payday loan lenders do not offer universal interest rates, so shopping around can often help you save get the best payday loan rates and fees and make the process of obtaining a new loan more financially sound.
Give yourself a cash advance in the future
This past week a little known company named Mint stole the show in the Internet industry. The company reached an agreement to sell itself to Intuit for one hundred and seventy million dollars. The interesting item as it relates to payday loans and personal finances is that Mint is a company whose sole focus is to help anyone create a financial budget and balance their finances online. They offer a FREE service to anyone and everyone who wants to establish an account to help set up a financial plan and create short and long term financial goals.
The economic downturn has effected almost everyone in this country. The old adage of having a nest egg equivalent to six months worth of your monthly income is certainly a lofty goal, but probably not attainable for the millions of Americans that live paycheck to paycheck in this country. When you head down the path of applying for a cash advance loan, it’s a clear signal that somewhere along the way your financial budget got off track. The idea of borrowing money on a cash advance basis is probably enough to send thoughts of anxiety through most consumers who are in this position. Credit cards, payday and cash advance loans are truly avenues of last resort when you are trying to make ends meet, but the reality is, they are often a necessary entity and a lifeline that covers your finances until your next paycheck.
The beauty of a free website such as mint is that it allows you to establish your own goals in the privacy of your home, without the intimidation of someone over your shoulder. The website offers a ton of free tools and guides to help assist with budgeting, finances, applying for loans and more. The best approach with setting up a financial plan is to establish short and long term budget goals. If your immediate situation is that you are in the process of obtaining a cash advance loan or payday advance loan, this is a great place to start from, lets call this ground zero. Most cash advance loans are between $500 and $1500. This money is not the equivalent of six months worth of income, as most experts recommend, but having a nest egg of $1500 for emergency money would be a lot easier than worrying about applying for a new payday advance loan. A realistic goal for establishing an emergency fund of $1500 over a six month period breaks down as follows. $1500 divided by 24 weeks, is $62.50 per week or $8.90 per day. This could mean eliminating one supersized meal, no cable television for six months, no short term vacation plans, etc. Finding the extra sixty two dollars per week is a SHORT term sacrifice, that helps put you in a much better financial position in as little as six months. Creating a financial nest egg, which allows you to borrow from yourself versus a lender, is always the best financial plan. The only way to true financial freedom is to create and establish goals for your finances. Free websites such as Mint can be utilized to your advantage and help reduce your dependency on financing and loan alternatives that require interest and fees Payday loans are an avenue to help cover you short term financial crisis, but are not a long term answer to your financial independence. Take advantage of the Free tools that are available in these tough economic times, to create a realistic plan of action to weather the storm and hopefully brighter days are in the future for everyone.
