5 Solutions To Short-term Cash Woes
Feeling the financial pinch these days? You are not alone
. If you are finding that your paycheck just doesn't stretch as far as it used to, there are options available. Ranging from short term loans to home equity loans, each solution presents its own set of distinct advantages and drawbacks. Learn more about which one is right for you.
Short Term Loans
Short term loans can cover your financial emergencies between pay periods. The application and approval process can be completed expeditiously, providing you with the funds you need within days.
However, short term loans tend to have higher interest rates, but these cost significantly less than bounced check fees, bank charges, or late payment fines.
Home Equity Loan
If you own your home, a home equity loan or line of credit might be an option over short term loans. These loans use your property as collateral, the interest rate is usually very competitive over other lending products, making the monthly payments more affordable.
However, the application process is lengthy, and there may be numerous fees involved. If you are unable to make your payments, the bank that holds your loan has the right to take possession of your home. These factors keep many from going the home equity route when they need extra money.
Borrowing from a Relative
If you have a parent or sibling with a significant amount of money, you might be able to negotiate a loan within the family, instead of resorting to short term loans. Many people find this approach saves them a significant amount in finance charges, since even relatives that charge you interest will often give you a break on the rate. They may also be more forgiving if you come up short on your monthly payment one month.
However, borrowing from relatives can also make for a tense relationship at times, and many of us simply don't have relatives that have the extra cash to loan.
Utilizing a Savings Account
An emergency savings fund is certainly the best option to pay for unexpected expenses as they arise, rather than short term loans. Most financial experts recommend having at least six months worth of your salary set aside for just such an emergency. When you have your own emergency fund established, you can borrow from yourself interest-free.
Unfortunately, people who are already having trouble making ends meet may not have the luxury of an emergency fund established just yet, making this option the "impossible dream" for many today.
Obtaining a Credit Card
Revolving lines of credit like credit cards are a popular way to provide financial peace of mind in the event of an emergency in lieu of short term loans. However, tighter lending guidelines today have led to many people being unable to qualify for a credit card account any longer. Even if you currently have a card, you may begin to see additional charges on your account for inactivity and a host of other variables. These hidden charges have led many to cancel their credit card accounts recently.
While there are many good options for getting cash when you need it, all have their own unique drawbacks as well. If you find yourself in desperate need of money, short terms loans can provide the money you need, when you need it.
by: Janet Gaither
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