Urgent Loans - Critical Facts You Need To Know

During tough economic times, many turn to loans as a means to make ends meet or to finance an unexpected expense.  If you have bill collectors at your door, on your phone or sending you threatening notices, an infusion of cash may be necessary – and this is where the many options for urgent loans may come in handy. 

Overall Concepts

If you are exploring loans, there are a few key concepts to understand, specifically “Credit Score”, “Collateral” and “Loan Terms.”  In essence, when making urgent loans, most lenders require two things:

• A demonstration of your ability to pay the loan back based on past performance (credit score) and
• The promise that you will give them something of equal or more value than the loan amount if you do not (collateral). 
• The terms of the loan (pay back timeframe, interest rate, etc.) depend on how well you’re able to demonstrate your ability to pay back

In other words, your credit score and sources of collateral will determine whether your loans will have a payback period of 5 years at 7% interest or 2 months at 25% interest. 

Sources

There are a variety of sources for urgent loans, many of which can get cash in your hands in as little as 24 hours.  Start by looking in to some of the following:

• Family and friends:  Family and friends are almost always one of the first options you consider.  Their terms are likely to more favorable than a bank or other institution and they may be less interested in the type of collateral you can offer.
• Cash Advances on Credit Cards:  If you already have credit cards and have any remaining space left between the amount you’ve charged and the limit, consider taking a cash advance.  Although the interest rate will be high on these kinds of urgent loans, it is often easier to get cash immediately through a credit resource that you already have, as opposed to applying for something new.  Check with your credit card issuer to see if they have a cash advance process.  You may even be able to get cash from an ATM or a local bank.
• Home Equity Loans:  If you own your home and there is a difference between the amount you paid and the market value, you may be able to get fast turnaround on a home equity loan.  Check with your lender to see if something can be arranged.
• Pay Day Loans:  Many companies, such as Discount Advances, My Cash Now and Personal Cash Advance offer urgent loans utilizing your paycheck as collateral.  If you have an unexpected expense that needs to be addressed immediately, but your paycheck won’t be available for two weeks, these companies will loan you the money in exchange for a financing fee.  In general, you must agree to hand over your paycheck to them the moment you receive it.
• Pawn Shops:  Sometimes, urgent loans are as close as your local pawn shop.  You can turn old jewelry, electronics or other valuable in to cash quickly and easily.  Basically, the pawn shop offers you a loan utilizing the valuable you’ve left with them as collateral.  You can return to buy the items back at a slightly increased fee (which provides the profit to the pawn shop owner) or you can leave them there to be sold to others.
• Online Person-to-Person Lending:  For urgent loans of up to $25,000, you might want to consider an option like Prosper, where people with available cash pool together resources to make loans to others.  The interest rate you will ultimately receive on your funds is based on your credit rating and your demonstrated ability to pay back the loan.  So, if your credit rate isn’t great, lenders will charge you a higher interest rate. 

When you’re in a difficult financial situation just knowing that there are options for loans can be comforting.  But remember, if you are using urgent loans indiscriminately as the only means to make ends meet, it might be time to take a closer look at your overall finances.