At some point, almost everyone needs to borrow money. The average person is unable to afford common purchases such as that of education or home without taking out a loan. In some cases, the consumer may be forced to take out a loan because of unexpected circumstances such as the loss of a job or medical bills. Such loans are usually described as short term loans because the borrowed funds have to be paid back, along with interest, in a year. The primary purpose of taking out such loans is for funding an expense when an individual doesn’t have cash immediately, but expects to have it in the future.
There are several ways that people can go about when they are looking for short term loans. People should shop around and assess their needs before choosing a method because some may be costlier than others. Some of the common ways of getting loans for a short period of time are:
• Contacting the Bank
There are numerous banks that are willing to lend money to their current customers for a short period of time. In some cases, the bank may demand some form of collateral for offering the loan such as money deposited in a checking account. If the money is being lent for the purpose of purchasing a home, people have the choice of borrowing money against the equity of their new home.
• Post-Dating Checks
There are lenders out there who are willing to offer short term loans to borrowers in return for a post-dated check. These schemes entail that the lender will give the individual some money for a short period of time, which is usually not longer than two weeks. The borrower has to give the lender a check of the amount borrowed, along with a fee, and write it out for the due date. If the sum of money isn’t returned to the lender after two weeks, he can simply cash the check. However, the borrower may have to deal with huge fees such as 400% interest if the check bounces.
• Property as Collateral
A short-term loan can also be obtained from pawn shops. The borrower can get a small sum of money by putting up their property as collateral for the loan. The borrower will be able to successfully reclaim his property if the sum of money and some fee is returned to the lender in the designated time period.
• Use the Internet
Nowadays, there are a large number of payday loans that can be obtained via the internet. The advantage of such loans is that they can be secured in 1 to 2 hours. All individuals are required to do is provide their bank account number, social security number and salary information. The money will automatically be deposited in the borrower’s bank account. However, borrowers should research the lender carefully because some of them may be unethical and charge almost 800% interest rates for providing these loans.
Any of these sources can be used for obtaining short term loans and solving cash flow issues.