There can be a multitude of reasons that a person could need cash fast. Anything from bills stacking up to unforeseen expenses can be a need for quick cash. Many people who may have less than desirable credit run into a need for loan quickly and find themselves wondering how to accomplish this task. There are a variety of solutions for loans that cater specifically to people who are seeking a loan with bad or no credit. Some options for short-term loans are better than others are and when utilized correctly, can get a person through a jam they may not otherwise get through.
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One of the many short-term loan solutions that people are familiar with is Payday or Cash Advance Loans. These are loans where the borrower supplies a check for the amount plus the applicable lending fees and the lender then cashes the check upon the end of the loan term. The scrutiny of these loans over the years is that they are somewhat predatory and have been the subject of a varying amount of government regulations.
The criticism surrounding cash advance loans usually comes from their high APR or annual percentage rate, which can be upwards of 800% in some places depending on the particular state's regulations. Although, many in the industry contest that APR is not a good measurement for loans with terms this short. Lenders tend to use similar metrics as bank overdrafts or bounced checks, in example:
Cash Advance
10% of the check + verification fee not to exceed $5 = 419% APR on a $100 14-day loan (Florida Office of Financial Regulation) Bounced Check $100 bounced check with $48 service and merchant fees = 1,251% APR
The higher APR and cost of these loans is to offset the cost to then lenders incurred by higher filing fees and a default rate that is around 10-20%. While cash advance loans can be helpful in a pinch, they are not a long-term solution to any financial issues.
Another form of short-term loans that many people are familiar with are Pawn Shops or Pawnbrokers. These are businesses or individuals that offer short-term loans in exchange for some form of collateral. The specific type of collateral is subject to the discretion of the pawnbroker but can include almost anything that the broker deems valuable. The broker assesses the value of the collateral and then the loan is given. If the borrower defaults, the broker becomes owner of the property and can sell it to recoup the defaulted loan. Pawn Shops have become popular in American culture over the past couple of years through television shows like Pawn Stars and Hardcore Pawn. In reality, they have been a part of culture for a long time and appeared in works such as an early Sherlock Holmes story entitled The Adventure of the Red-Headed League.
A third option for a no credit check loan is the Car Title Loan, which uses the borrower's car title as collateral. These types of loans allow the borrower to acquire more substantial amounts than a pawnbroker or cash advance, but are still a short-term solution. The requirements are that the borrower has a clean car title, meaning that there is no current financing or liens against said car. These types of loans have incurred criticisms just as the other forms discussed here. However, when dealing with a company that has a high approval rate, this can be a quality solution to a short-term cash flow issue. The risk involved with these loans are that if the loan is defaulted upon, the lender takes possession of the borrower's vehicle.
It is not hard to find a reputable car title lender and then check third-party sources on the credibility and reliability of these loans. They are to be undertaken with caution though, as losing a vehicle can be more detrimental than much of the financial issues a person may already have.
Most people experience the burden of the necessity of needing cash fast. While there are many options that require a line of credit, there are solutions if that is not possible. When deciding to acquire a short-term loan, make sure to assess the need and research the lending method as thoroughly as possible.
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