Each of us was at least once in a situation when money was needed quickly. For example, a refrigerator broke down, and you face the need of an urgent purchase of a new one, your car broke down or you have to pay for medical bills or you simply need money before your salary.
In these cases, the problem requires a quick solution, so the idea to save the necessary amount of money for several months is impossible. The only way out in this situation is to get a credit. Let’s look at the pros and cons of 5 different types of small loans.
1. A loan from a friend / relative
You can apply for help to friends or acquaintances and borrow from them the necessary amount of money. Mostly, neither relatives, nor friends who lend, do not charge interest, so this option is quite profitable.
In order to secure both yourself and the one who lends you money, you might, however, need to draw up a minimum set of documents for such a loan. Ideally, it is necessary to formalize the loan agreement, which will specify the conditions that determine its size, the procedure for return, the interest and the responsibility of the parties for failure to comply with the terms of the contract. You also might need these documents to be notarized.
2. Quick credit
The main features of this non-banking loan are short loan terms and a relatively high fee for the use of the funds. For example, for 2 weeks of using $1,500 you will have to pay $420. The length of the crediting period in such financial companies rarely exceeds 2 weeks.
3. Credit card
The owner of a credit card can use the bank’s money for free on average about 50 days. This means that if you make purchases from the credit limit and return the entire amount during the grace period, the bank will not accrue interest for using the loan funds. It is noteworthy that the credit limit can be used repeatedly – as soon as the debt is repaid, you can again be repaid by credit. The credit card is issued once, and it can be used for years. Credit cards have some drawbacks, like any credit offer.
For example, if the loan is not repaid in the agreed period, the interest rate on the credit card will be higher than the rate for certain types of loan. In addition, some banks charge a commission for issuance and annual maintenance of the card.
4. Online loan
Online lending is a new way to get money quickly and easily. Usually, online services work around the clock and without days off and allow to borrow a small amount for a short time. But there are high-interest rates. The method that is less expensive and more profitable is to work with lenders directly.
5. Cash loans in a bank
In some banks, you can draw up a separate loan for a small amount. Cash can get up to $1,000-$2,000 for a fairly long period – 2-3 years. It should be noted that some banks provide an opportunity to return the money ahead of schedule without accruing fines.
Nevertheless, there are certain disadvantages of such loans, such as strict payment terms. In general, to issue such a loan is quite simple – you only need a passport and tax ID. But every time you need to borrow even a small amount, you will have to come to the office, make an application and get the approval of the bank.
Anyway, it doesn’t depend on what you need money for and where you are borrowing it from, you should never deal with shady lenders.