Your car went kaput but you don’t have enough cash on hand to fix it. What do you do? You’ve got to get to work somehow!
Thankfully there are plenty of ways that you can get an instant loan. The trouble is, there are lots of options and you don’t have time to research them all.
You may have heard one too many horror stories about payday lenders and the like charging 300-1000% annual interest. You want to make sure that doesn’t happen to you.
Read this guide for some handy tips on what to watch out for when applying for an instant loan. This will help you find a good option fast so you can get back on the road again.
Many easy ways to get loans come with a very big price tag. The APR you’ll pay on a credit card cash advance can be astronomical. Payday lenders, as we’ve already seen can be far worse.
Paycheck advances are a cheaper option but often have small limits. You can pawn something, but you’d have to have something of value that you wouldn’t mind losing.
Online lenders are a great alternative to these options. They can take a little longer to fund–from a couple days to about a week.
But for the extra time, you can get a much more favorable interest rate. That will make it easier for you to pay off the balance and is a better option overall.
As you look at instant loan options, here are some things to keep in mind.
Secured vs Unsecured Loans
To get a secured loan you have to offer up something as collateral. This means that if you don’t pay back the loan, the lender can lay claim to whatever you offered as collateral.
You can use many things as collateral. Common items include property, homes, cars, etc.
The big advantage to this type of loan is that you can secure a lower interest rate. The lender is taking less of a risk in lending you money.
If you don’t pay, they have the right to claim your collateral. They can then sell it to earn back what they loaned you. The trouble for you is, if you can’t pay back the loan, you lose whatever you used as collateral.
An unsecured loan is exactly what it sounds like. You don’t offer anything as collateral to secure the loan.
The lender will pay closer attention to your credit history when offering an unsecured loan. They also tend to charge higher interest to offset the risk they are taking with you. The limit on the amount you can borrow is often lower as well.
Pay Attention to Overall Costs
The big thing you always want to know when shopping for an instant loan is how much interest you will pay. That’s a very important question as it is a big indicator of how expensive the loan will be.
But, remember that the interest rate isn’t the only thing you’ll pay when taking out a loan. There are often other fees and charges lenders tack on that might not be as obvious as the interest rate.
Sometimes lenders will offer an awesome interest rate to attract unsuspecting borrowers. But once they’ve got you in the door, you start finding out it won’t be as cheap as you thought it was going to be.
One way to know the true cost is to pay attention to how the interest rate is worded. Is it called an interest rate? Or APR (Annual Percentage Rate)?
APR typically rolls all the extra fees and charges on your loan into your interest rate for one year. This number will help you know what you will actually be paying for the loan.
Also, be aware whether the interest rate is fixed or variable. Lenders might entice you with an attractively low variable APR. But there’s little guarantee that your rate will stay that low.
If you plan to pay back the loan quickly, a variable rate with a low starting APR may be beneficial. But be careful. If you end up not being able to pay as quickly as you thought, you could be stuck paying a high interest rate in the long run.
Think About Loan Length
The amount of time you have to pay back a personal loan can vary by quite a bit. Typically, the more time you have to pay it back, the higher the interest rate will be. Thus, the faster you can pay back the loan, the better off you’ll be.
The tricky part is that the monthly payment might be lower, making you think that you’re getting a better deal. But stop and add up how much you’ll actually pay in interest once the loan term is complete. The difference can be shocking!
Try to get a loan for the shortest amount of time possible to save on interest payments. But, be realistic about your financial situation. Don’t put yourself in a position where you can’t make your monthly payments on time.
Another thing to ask is if there are prepayment penalties. Sometimes lenders will charge you extra if you pay more than the required monthly payments. Other times, they don’t.
If there are no prepayment penalties, you could take out a loan for a longer period of time. But then plan to pay it back faster on your own account.
If you can’t make your goal payment for a month, it’s no big deal. Just pay the required amount and you’re good to go.
Find Your Instant Loan Today
Now that you know what to look for, it is simply a matter of checking out a few lenders. The great thing about online shopping is that you can do it from the comfort of your own home. That way you’ll save tons of time because you don’t have to be driving around and finding lenders to talk to.
Make us here at Bonsai Finance part of your search. We have lots of great options for personal loans. Even if you have poor or bad credit, we can help you find the right loan for your needs.
Reach out to us today to get the process started!