Fast money loans
At the event of an emergency, people do not have enough time to complete the loan application process and wait for banks to approve that. In such scenarios, you can opt for some personal loans termed as quick loan. But in the desperation of getting money, it is very easy to make the wrong choices in terms of the lending company. Many predators take advantage of such situations, so it is necessary to do some research and take care of a few things before making the decision. We list some of the choices you can make at the distressful situation.
Friends and Family
For a small amount of money, family members and friends are one of the best and reliable sources for lending out money. They may be willing to help you in if they know you are in trouble. You do not have to provide any interest or collateral in most cases. However, if you do not pay them back after a certain period this affects even the strongest relationships. This is one of the reasons most people want to keep money away from the relations they value.
Advances from Credit card
If you have sufficient credit left which you can withdraw from your credit card, this is a very fast way of getting cash. If you take out advance cash using a credit card from ATM, interest is levied on it immediately. And this interest rate is much more than the usual interest rate for credit card purchase. In many cases, you can find yourself paying out many times of the original amount when you pay your credit card bill.
QUICK Loans from BANKS and Credit unions
Many banks provide certain quick personal loans, which can be repaid in a definite amount of time, with predefined instalment amounts. This is an instalment loan which can be paid as monthly payment like a bill.
The time required to get funds depends on both the lender and where the money is deposited. Some companies take around a week or some days to get the loan approved. But some lenders deposit funds on the next business day. Hence, it is important to know these details before getting such a loan.
Payday loans and advances
In this type of loan, your pay check is taken as a security deposit for the loan amount. When you need money in an emergency, you can take a payday loan even if you have very bad credit. The lender has the ability to withdraw money from the next pay check you receive. Want to know how they do this? Let me explain.
When you have been approved such a loan, you need to provide the granter a post-dated check of the amount you have to repay with the date as of your next payday. Also, in online loans, permission is given to the lender to withdraw money from your account after your salary being paid by your employer. Also, the interest charged by these companies tends to be on the higher side.
It is advisable to take a payday loan if and only if you are sure to be able to pay the loan from your next pay check. Otherwise, this can land you in a vicious cycle of debt and penalties. If you fail to repay the amount and the lender’s fee in the next pay cycle, the principal amount + fee is considered as a principle for the next cycle. Let us assume this scenario:
You have taken a loan of 100$ from the lender, and the lender’s fee can be between 10 $ to 30 $. At the first instance, this may not seem a high amount, but often people take these loans to pay off a bill or something that came up in the middle of the month. So, if you calculate, for two weeks’ time period, the interest rate is around 400%, if the fee is 15$. Now, in the next month, due to some unforeseen event, you could not pay off the loan completely. Since this does not have a provision of paying in instalments, you decided to roll over the loan to the next cycle. To do this, you have to pay 15$ fee again.
So, the current scenario is: you have paid out 15$, and after that, you have to pay 115$, as you have not repaid any principal amount.
Hence, before getting a payday loan, make sure you will be able to pay the whole amount on your next payday.
CAR TITLE loans
A car title loan is a type of short-term loan which you can take by keeping your vehicle as a deposit. In this loan, the registration of your car is kept as collateral with the moneylender till the time you repay the full amount. Generally, you can get this type of loan for 15 to 30 days.
This is one of the most expensive types of loan, and the statistics from the Consumer Financial Protection Bureau shows that 20% of the people who had taken such loans are not able to pay back. And this results in seizing of the car by the moneylender.
Loans from Pawn Shop
In case of emergency, you can keep jewellery, the latest gadget, musical instruments, and high-value goods as collateral and borrow money from pawn shops. You can get this type of loans only for 25 to 30 percent of the value of the asset you have kept as a deposit. To get your property back, you need to pay back the whole amount along with any interests.
Peer to peer lending
P2P lending like marketplace has become common in these days. Here, you can get money from the individuals who want to invest and no company or financial institution is present in between. This is a third-party platform where individuals can look out for possible moneylenders.
This type of arrangement prevents banks from making money by levying interest on the customers, and the investors can directly charge interest for the money they are paying. However, it is very important to be cautious while borrowing money as there can be fraudulent people on the platform.
If you are a member of some credit union, they provide payday loans of any amount between $200 and $1000 for a time period up to 6 months. The advantage of credit union alternate loans is that the interest rate is capped at 28 percent unlike the payday loan described earlier.
To get a loan approved by the credit union, it is sometimes necessary to have a membership of 1 month or more.
ADVANCE from Employer
Many companies have the provision of advance salary for their employees. So, you can contact your HR or payroll department if they can give advance loans or some personal loan. Often the interest charged on these personal loans is lower than the market rate. The amount and the interest will be deducted as instalments from your upcoming pay checks over a period of 6 – 24 months.
Online personal loan
Even if you have bad credit, some online financial institutions may agree on approving your loan. Mostly their interest rate is higher than the usual personal loans but significantly lower than the huge payday loan interests.
After submission of a loan application, the lender does a verification of information provided. Depending on that, they decide the amount they can provide and the interest rate. The best thing about such a loan is that you can receive the amount in your bank in a few business days after it is approved.
Loan against gold
You can get loans from banks and other financial institutions by keeping gold as collateral. The amount that you are likely to receive is around 60 percent of the gold value. The time period for a gold loan is generally up to 1 year. The gold purity should be in 18-22 carat. Also, if you are not able to repay the loan at a time, you can renew it by paying some fee. You can repay the loan in instalments but you will get back the gold once the total amount has been paid off along with interest.
Loan against term deposits
You can keep mutual funds, FD’s, shares and insurance policies as a deposit to the lender. For mutual funds and shares, banks cover an amount up to 50 percent of the value. For fixed deposits, banks can loan you up to 75 percent of the FD value. In the case of bonds, 85 percent of the bond value can be borrowed. The amount is disbursed into a current account for you to withdraw.
The advantage for this loan is that it is low on the interest rate and you can receive the money in a short amount of time. However, if the share value decreases, you might have to keep more fund or shares as collateral.
If you own a house or land, you can keep that as collateral and take a loan from the bank. The amount you are most likely to get is a maximum 65 percent of your property valuation. Amounts ranging from 5 lakh to 10 crores can be borrowed from banks depending on your property value in the market. The interest rates range from 9.5 to 13 percent which is lower than the personal loan interest.
One disadvantage of this type of loan is that it takes around 1 week to get the money. This is because banks want to verify every information about your property. So please ensure that your house is insured.
Top up on home loan
Ifyou have already taken a home loan some years back, and now want some money for an emergency, you can get up to 50 lakhs of extra loan from a 20-year term period or till the original tenure of the home loan. But this is valid only when the added value of the home loan and top-up is not more than 75 percent of the value of your home.
The advantage of this loan is that you can get the money in 3 business days, as the bank already have detailed information about you. However, be sure to pay back the whole amount as the property is kept as a deposit.
Loan against vehicles
If you have a car, you can take a loan for an amount between 50- 70 percent of your car value in the market. The interest rate ranges from 11- 16% for a time period of 1- 7 years. In many cases, the car should be less than 5 years old to get such a loan.
Financial companies have some other charges in addition to the interest which you have to pay. These include a processing fee (1-3 %), documentation charges, EMI interest and stamp paper/registry charges.
Loan from PPF
You can take a loan from your PPF account after at least 2 years of opening the account. The maximum amount that can be obtained is 25 percent of the available balance at the end of the immediate past two years. They charge no extra fee for processing and the interest is 2 percent more than the PPF deposit interest.
Loan from Insurance Policies
For some policies like moneyback and endowment, 80 to 90 percent of surrender value can be taken as loan from LIC or banks. The time period entirely depends on the maturity of the insurance policy. LIC does not have any fee for these loans, banks charge a small fee. This is not valid for certain policies like term plan.
So, there are multiple alternatives to get a loan quickly in varying interest rates in addition to your credit card. But please make sure to do research properly and pay the debt in full within scheduled timelines. If you are a person with a bad credit score, try to opt for measures to improve it or get a co-signer to be approved of a personal loan quickly.
It is important to be cautious against fraudulent individuals and company which may disrupt your borrowing experience. Lending money from high-quality professional institutions is secure and easier and hence advisable.