Short term loans offer great help to cash-strapped borrowers who need to tide over their temporary monetary issues entailing payment of urgent medical bills, car repair bills etc. These loans are approved fast and are typically suited for borrowers with bad credit who are most likely to be turned down by traditional lenders. There are no credit checks involved in short-term financing and once you are approved, the payday lender will deposit the money in your account within 24 – 48 hours. However, the high rates associated with short-term financing require you think carefully before securing its help and consider alternatives as well.
Why Should You Think of Alternatives?
The primary reason why you should reach out for pay day loan alternatives is the exorbitant rates of interest that come with them. How expensive are they? For instance, you have borrowed $ 120 dollars for two weeks and are supposed to pay back $ 140 dollars on your next payday. Here $ 20 dollars acts as your borrowing fee. You can write a check of $ 140 to the check casher who agrees to hold it until your next payday (i.e, after 14 days here). You can either redeem the check by paying $140 in cash or else opt for a rollover paying extra $20 dollars for another 2 weeks. If electronic payments are allowed the lender would take the entire $140 dollars from your checking account or else extend the loaning amount for an extra $ 20 dollars for the next 2 weeks. In this manner you would end up paying $160 dollars for an initial $120 dollar loan with further extensions costing you more. Lack of secured transactions is another reason why you should seek alternatives to online short term loans quickly. Most of the payday lenders conduct businesses online and there are high chances of borrowers falling prey to bogus companies. You have to provide very sensitive information including your bank account number and residential address etc. So make sure that you establish the reputation of the website thoroughly before taking a loan.
What Are the Alternatives?
If you are serious about shying away from fast cash loans, in order to meet your urgent needs you can always consider other alternatives available. Here is a list of few of them:
- Build on your credit history. Most of the times borrowers are found turning to short-term financing owing to fear of being turned down for conventional loans because of bad credit ratings. Don’t let this happen. Pay your credit bills and other loans on time to make sure that you can take aid of normal bank loans at affordable rates when needed.
- Build up an emergency cash-cushion. Make sure that you are keeping some money aside every month, so that it can be used during financial emergencies.
- Work overtime. Quite simply put, you can’t really anticipate an accident or illness in family owing to which you would need immediate cash. However, if you know that you would be requiring extra money in the coming month for a routine medical check-up or for submission of college fee; you can work over- time or else look out for other sources of earning temporarily in a bid to meet these needs.
- Stick to a budget. Make sure that you are spending as per your earnings. Even if you have gone overboard with your budget you can make up for it by resorting to more thoughtful spending for the coming days!