Posts Tagged ‘ debt ’

How Do You Know if a Short-Term Loan is the Right Choice?

There is a lot of confusion and doubt surrounding the lending industry right now. You’ve probably heard positive and negative things about short-term cash loans. If you are currently in a financial bind and wondering if this type of loan is the right solution for you, read on and see if this product fits your needs.

Are Short-Term Loans Good or Bad?

Are Short-Term Loans Good or Bad for me?

a short-term loan is the smarter choice for you if…

  • You occasionally bounce checks. The average bounced-check fee is $27.04. More banks are now using a tiered structure where the first check bounced incurs a $25 fee, the second bounced check will cost you $30, and any additional a whopping $35 each. Add on the $30 average bounced-check fee from the merchant and your costs continue to escalate. You could borrow $200 with a short-term loan for about half that cost… not only saving you money but saving your credit rating.
  • You only make minimum payments on your credit card balance each month. American’s currently carry about $1 trillion in credit card debt… many making only the minimum payment each month, driving the true cost of borrowing a few hundred dollars into the thousands. In fact, charging $500 on a credit card that already has a $2000 balance will cost you over $1400 making only minimum payments. With a short-term loan you can borrow the $500 for about $115 in fees – and because you pay it back quickly, the cost (and your debt) doesn’t continue to grow.
  • Need a little extra money between paychecks. Unfortunately life doesn’t happen on our pay schedule – which means even the most carefully planned budget can be thrown off by unexpected expenses. When that happens and you don’t have the time (or option) to use other bank products (like a line of credit), a short-term loan provides a quick, no hassle, short term solution.
  • Regularly overspend and get off budget. If you’re an impulse shopper and are surprised every month at how much debt you’ve incurred, short-term loans that require you to pay them off in full monthly may be a smarter choice for you as they’ll force you to be much more conscious in your spending.

a short-term loan may not be right for you if…

  • You pay your credit card off in full regularly. If you have your credit card spending under control and are paying off the balance regularly, then that’s the best choice for you. Make sure you’re using a credit card that offers advantages like discounts at your favorite merchants, reward points (such as Air Miles) and no annual fees.
  • You have access to inexpensive bank products. A line of credit and small loans through a bank typically have very low interest rates. If you have access to these products, use them. Of course, you should still shop around, not all banks are equal, and even if you have most of your accounts at one bank, you may find a better deal at another.
  • Friends and family can help you out. OK, for many of us asking friends and family for help is the last thing we want to do, but if you are lucky enough to have some rich friends or family members you’d be crazy not to start there first.

For more info on specific loans, browse the Frequently Asked Questions on Paradise Cash Advance in the U.S., and CashCanDo in Canada.