Nowadays, there are several options you can turn to in case you need financial help. Many people take advantage of different loans to make ends meet or cover unexpected expenses. One option that they find most convenient is a quick cash loan.
As the name implies, it can provide a fast solution for your financial emergencies. But while it does help you alleviate a current financial need, getting a quick cash loan may not be beneficial to some situations.
To help you utilize it appropriately, you can read further and learn when is the best and worst time to use a quick cash loan.
How Does A Quick Cash Loan Work?
Also known as an emergency or fast cash loan, a quick cash loan is specially designed to accommodate those people who need money right away to settle unexpected expenses. Most quick cash loans are unsecured, which means there’s no need for any collateral.
Typically, you will be approved based on your credit standing or capacity to make the monthly payment. You can borrow even if you have poor credit. This type of loan is short-term, which means you’re supposed to repay it within a short time.
Most quick loans are completed electronically for a faster and more convenient process. Thus, if you need cash immediately, you can look for an online fast cash loan provider available near you. By completing a small application online and approval by a loan provider, you can get the money even within the day or hour.
Types of Quick Cash Loans
There are different types of quick cash loans, but the following are good options to consider:
A payday loan is a short-term and quick loan that allows you to borrow a loan amount based on your current paycheck. Typically, you must repay the loan by your next payday. It should be noted, though, that every state has different regulations for payday lenders. Thus, the loan amount, fees, and term available to you may differ based on where you live.
One of the downsides that you need to consider with payday loans is that they can lead to a debt trap. Many borrowers can easily find themselves stuck in a cycle of debt where they will continue taking out additional payday loans to pay off the old one. This type of loan is relatively easy to get, but the interest rates can be considerably high.
Personal loans often have flexible purposes that you can use during emergencies. Depending on the personal loan you’re going to apply for, the lender may or may not require collateral. However, you may qualify for an unsecured personal loan if you have good credit.
Personal loans have better interest rates than payday loans. Because these are also typically installment loans, you can pay it back over a predetermined period with a fixed interest rate. If you only need a small amount of money, you can also opt for a small personal loan.
When Should You Consider It?
You can use a quick cash loan for short-term financial problems, which are expenses you didn’t expect but need to pay as soon as possible. Here are some of the best times that you can make the most of a quick cash loan.
Unexpected Job Loss
If you get terminated from your job unexpectedly and don’t have enough funds to get by, getting a quick cash loan can help you live off while looking for another job. However, it can still be too risky, especially if you cannot find another job as soon as possible.
Besides the usual maintenance cost of your car, there might be instances that you need to deal with an unexpected car repair bill. Unless you have a personal emergency fund, a quick cash loan can be a great help.
Like cars, there are also house repairs that you might not expect to come at a particular time. Whether it’s a washing machine problem, a boiler breakdown, or damage caused by natural disasters, a quick cash loan can be a suitable option.
When Should You Not Consider It?
Quick cash loans can be beneficial for emergencies. However, there are some situations when getting one won’t be helpful to your financial health. If you don’t want to face more financial troubles, you need to be mindful of when you should not consider taking out one.
The following are some of the worst times to use a quick cash loan:
Pay off Credit Card Debt
Using a quick cash loan to pay off credit card debt may not be a good idea since it only offers a solution for short-term emergencies. By doing so, your loan can be extended and may double or triple your fees since the interest rates can be significantly huge when calculated on an annual basis.
Pay Utility Bills
Paying your utility bills with a quick cash loan can be possible, but they may not be helpful in the long run. Since utility bills are something that you’re expected to pay every month, taking out a quick cash loan may bring more harm than good. If the amount of your utility bills always comes as a surprise, you might have to do something other than getting a quick loan.
Non-essential purchases include items or experiences, such as a holiday, that you can live without. Using a quick cash loan to pay for them can only cause or add to your debt burden, especially if you already have bad credit.
Quick cash loans can worsen one’s financial situation if they are misused. The purpose of the loan is intended for short-term financial emergencies. Thus, using one for long-term financial problems may not be helpful at all.