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Types of Short-Term Loans Available
Release Date:
2017-02-17
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Life is full of surprises and sometimes you may even wonder if you'll be able to pay off your debt before you pass on, or if you'll leave the obligation for a spouse or your children. If you already live on a stretched budget coming up with the money to cover an unexpected emergency like a repair may not be something you're capable of. The good news is that there are several different types of loans available. It's during these times that banks offering short-term personal loans come in handy. They can get you the cash you need to cover the immediate emergency with repayment terms that generally range from a few months up to 2 years.

Personal loan

Banks and credit unions offer personal loans with desirable interest rates. The catch is that since there's no collateral like obtaining a mortgage or auto loan, you must have good credit. In addition to a good credit score, you'll also need to provide the bank with a list of all your outstanding monthly obligations and a recent pay stub to prove employment. If your debt to income ratio is too high chances are pretty good that you won't get the approval for the loan.

Credit cards

While credit cards are certainly not the first choice for adding a large purchase, they can help you to get the repair when all other tried venues fail. If you don't have enough available credit to cover the expense and you've made your payments on time, you could contact the company and ask to increase your credit line. If they agree to this you'll do it without adding any new debt to your budget, since you already have a certain amount included each month for this card. Since the interest rate is higher than that of a traditional personal loan, it's best to pay this off as quickly as possible.

Online short-term loans

There are many companies online that offer short-term loans for a few months up to a couple of years. The terms and requirements are usually pretty simple, making it easy for a first-time borrower or person with bad credit to get an approval. Most times the main thing you must have is a steady job with a paycheck weekly or bi-weekly. Other things may include U.S. citizenship and a checking account in your name. The interest rates from these lenders that offer a fast payday loan alternative are a bit higher than traditional loans through a credit union or bank, but the repayment terms with up to two years allows you to pay a small fixed amount each month.

Payday loans

If all else fails and you can't borrow from family or friends, or acquire a personal loan from a bank or credit union, a payday loan may be the only way you can get out from under. These loans are easy to acquire usually you just need a job and a checking account with a direct deposit. The repayment terms are very short term, with you needing to repay the loan within a month or two. On the downside, these loans can cost you 300% or more in interest.

It's never good to borrow money if you don't have the means to pay it back. In order to prevent this from happening in the future, it's important to establish your own emergency fund where you put a small amount into it each week and you only use it for true emergencies. Even putting just $10.00 a week into it will add up quickly.
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