3 Different types of Quick Loans and how to Qualify
Need cash fast? The economy has largely recovered since the recession, but many workers aren’t feeling relief. A Royalty Society of Arts survey found 70% of British workers are “chronically broke”. That means even a small financial setback can have dire consequences.
When you don’t have the funds on hand or credit cards to pay for an unexpected expense, there are two options: borrow from friends and family or take out a loan. Many people think of loans as a way to make big purchases, but there are a variety of financial tools that can be used to cover smaller expenses as well.
Installment Loans
One of the best options available today are installment loans, also known as alternative payday loans. As the name suggests, these loans are similar to a payday loan in the qualifications and cash amounts, however, they tend to be more beneficial for the borrower because the repayment terms are more lenient.
Maxlend.com is an example of an alternative payday loan lender. They provide installment loans up to $1,250 that can be secured in as little as a day. Instead of paying everything back in one lump sum, borrowers are able to pay the loan back in smaller installments like a mortgage or vehicle loan.
Because of the repayment structure, installment loans tend to be less expensive overall compared to high-interest payday loans. At the same time, the qualifications are minimal. People with no credit or a bad credit history can still apply and get qualified for installment loans as long as they provide proper identification and are able to verify an income source.
Payday Loans
Payday loans have undergone a number of changes since the recession, but they still exist. As noted above, payday loans provide access to fast cash, but it comes at a cost. Payday loans are short-term and must be paid in full plus any additional fees by the borrower’s next payday. If the loan isn’t paid in full the borrower will incur extremely high-interest fees.
Another consideration is the amount that can be borrowed. Typically, payday loans are $500 or less. The amount is small because payday loans are meant to simply get a person by until their next payday. They are known as check advance loans because the borrower must write a post-dated check for the full amount.
When it comes time to pay off the payday loan, a borrower can pay cash or allow the lender to cash the post-dated check. If the borrower isn’t able to pay the amount in full they will have to write another check that includes the loan amount, fees and additional interest. The fees for a payday loan vary and are often dictated by local or state laws.
You may be wondering why anyone would risk taking out a payday loan. More people now opt for more favorable alternative installment loans, but some people resort to taking out a payday loan because they can’t qualify for another type of loan. Most payday lenders don’t require a credit check during the application process.
Auto Title Loans
Auto title loans also provide quick cash, but they function differently from installment loans and payday loans. Title loans are short-term loans that are secured by a vehicle that the borrower owns, which is used as collateral.
Taking out a title loan is fairly straightforward, but it’s limited to people who have equity in a vehicle. The other downside is that the borrower could lose their vehicle if they fail to repay the loan.
Borrowers can usually get anywhere from $100-$5,500 with an auto title loan. How much you receive depends on how much equity you have in the vehicle and how much it is worth.It’s standard for lenders to offer a loan somewhere between 20-50% of the vehicle’s worth.
During the application process, the lender will verify personal information, income, and vehicle ownership. Borrowers must hand the car title over to the lender who will hold onto it until the loan is repaid. The lender may also install a GPS tracking device in the car so they know where it is located in the event they plan to repossess the vehicle for non-payment.
