Whether you look for additional cash to make debt consolidation, cover healthcare-associated expenses or just plan a vacation, it may be pretty frustrating if you have no idea what options you have out there.
We've made up a list of alternative funding choices, accompanied by their benefits and drawbacks. Thus, consider examining each option before deciding whether securing a loan may work for you.
Conventional Banking
A personal bank loan may appear an appealing choice when you need fast money. Some banks even waive loan origination fees and offer quite advantageous funding options. If you are a regular customer, you may also qualify for an interest rate reduction, commonly known as a relationship discount. Some banks provide loyalty reductions on personal loan interest rates, of course, as soon as you maintain a bank account in good standing. However, keep in mind that some large banks do not provide personal loans at all, while others may need you to have at least good or outstanding credit to qualify for a personal loan.
Credit Unions
Opting for a credit union personal loan may seem a better choice based on lower interest rates and fees. Typically, credit unions are non-profit organizations devoted to servicing their members instead of making a profit for shareholders. The main disadvantage is that you must meet certain eligibility criteria to become a credit union member, including a particular country residence or affiliation to a specific business or employee.
Online Cash Lenders
Indeed, online lenders have come out as an alternative to traditional lenders like banks and credit unions in this digital epoch. This is because online lenders do not bear the costs associated with operating physical branches. They provide an online user experience so that you can request and get loans from the comfort of your home. Furthermore, many online lenders offer fast cash advances with direct deposit, meaning that money will be sent into your checking/savings account once you get approved. If you are unfamiliar with the lender, look into its reputation, make appropriate queries and get references from other borrowers to determine which funding option will work best for you.
Cash Advance on a Credit Card
Using a credit card to get cash is also a convenient alternative. Because you already have a credit card, you don't need to take out an application or pass through a credit check to obtain a short-term loan against the credit line available on your card. In addition, the funds are usually available immediately.
Nevertheless, the convenience of a credit card cash advance has a quite hefty price tag. Some credit card companies impose fees for cash advances, in addition to a high interest rate. Furthermore, most credit cards do not include a grace period for cash advances, which means that interest charges begin when money is withdrawn.
Payday Loans Online
A payday loan, also known as a cash advance or paycheck loan, is a small-dollar loan taken out for a short period, typically for up to $2500. You can secure a payday loan online or in person at a storefront office. However, payday loans are a costly type of credit; thus, it would be better to consider them a last resort funding alternative.
Payday loan online must be settled upon the borrower's next paycheck, typically within two to four weeks. Unlike traditional customer loans, where multiple installments are spread over a long period, payday loans must be repaid in a lump sum payment (principal amount + interest).