Finding fast cash for emergencies can be tough especially if you don’t have savings and lack good credit. That’s why so many people choose to take out payday loans, car title loans, tax refund anticipation loans and even purposely overdraft their bank account. But using any of the aforementioned methods to get fast cash could cause fast and long lasting financial problems. There is another way. Consider taking out a short-term loan from you bank or credit union; but before you do, ask the following questions:
- How much will they charge for interest and fees? Compare their interest and fees to the prime interest rate. Is the interest rate you’re being offered significantly more than the prime rate?
- What is the true cost of the loan? The true cost will include any interest and fees.
- How long do I have to repay this loan?
- Can I honestly repay this loan in the short time provided? Be honest about this, because if you are unemployed, it may not be wise to take out a loan.
- How much are your payments? Are they monthly, weekly or bi-weekly? How realistic is it that you can actually fit these payments into your budget?
- Will this short-term loan solve a long-term problem or is it a temporary fix? For example, if you are considering taking out a short-term loan to pay your rent and other basic expenses for the next few months because you’re unemployed it is probably not a wise choice. Bankruptcy may be a better option in that case.