Unexpected Ways To Meet Financial Obligations If You Need Money Now
Running short on cash? Well, you’re not alone. According to a survey, around 90% of salaried Canadians seek-short term personal loans, intermittently.
The year 2020 has been difficult for every economic class, globally. With weeks under lockdown, economic activities had to come to a halt. And it’s not only a few, but every community has felt the brunt of this pandemic.
Noticeably, there has been an increase in short-term personal loan applications, this year. Of course, if you think I need money now, you can get in touch with a private lender or a bank. But surely, it’s not the only way out.
Perhaps, this article should give you plenty of ways, including online private lending options, to meet your financial obligations when you need money urgently.
So, without any further ado, let’s begin.
Online Payday Loans
One of the most frequently sought-after solutions for emergency cash needs is an online payday loan. These loans are short-term personal loans, usually available from private lenders.
The term for payday loans does not exceed a month, as the name already suggests, these loans are termed between paydays. Simply put, you’ll need to repay your loan amount with your next payday.
Notably, these loans are only best when you need small cash. For example, if you need $2500 immediately, seeking a payday loan might be a good move. But at the same time, the more you borrow, the higher will be the rate of interest.
On this note, it is better to know that payday loans would already be costlier than conventional loans. So, you should be prepared to pay a higher processing fee and interest for as little as a $100 loan that you borrow.
Short-Term Installment Loans
While the repayment for a payday loan is to be made in one go, there are other personal lending options that allow you to repay in installments. Although the term for these loans is also short, installments can help bring down your financial burden.
Unlike payday loans, the rate of interest for installment loans is comparatively lower. It usually ranges between 12% to as high as 30%. But it also depends on the term of the loan and the amount you borrow.
Another noteworthy fact about online installment loans is the ease of access. These loans are easily available and you can expect to receive the loan amount in 1-2 days.
Even better is the fact that these loans can also be availed of with a bad credit score or history. The lenders usually do not carry out hard credit checks. All they need is a bank statement to assess the credibility of the applicant. In other words, they only need to ensure if their loaned amount would return in time or not.
While the CoronaVirus pandemic has raged havoc on many, there is some relief for people who hold a 401(k) account. Making a withdrawal from your 401(k) account is now penalty-free up to $100,000, under the coronavirus relief package.
However, the experts advise otherwise – withdrawing funds from your 401(k) account can have a drastic impact on your long-term finances.
On the contrary, it is rather advised to take out a loan from your 401(k) account. Now, of course, you’ll be paying interest on your loaned amount. But, luckily, you’ll be paying it to yourself only.
To put this into perspective, the interest you pay is credited into your 401(k) account. And in addition to this, you also receive interest from the bank on the amount you vest.
But, there’s a catch to it, when you take out a 401(k) loan. If you happen to leave your job somehow, you’ll be needed to repay the loan within 30 days. Otherwise, it shall be considered as distribution of payment and you may have to repay the amount with a penalty fee.
Business Credit Line
Typically, a business, regardless of its size, has access to a credit line with the bank it has its account. For customers who maintain a healthy balance and carry out a satisfactory number of transactions every month, the banks offer credit lines similar to a credit card.
If you are a business owner operating a current account with any bank, you can ask your bank for a business credit line. As already mentioned it is quite similar to having a credit card, but for business purposes only.
The amount that you spend is considered as debt and you are required to pay it back with interest. However, the noteworthy point is the interest is unconventionally lower. Plus, there are several other perks of using a business credit card.
Mortgage Against Valuable Assets
Don’t be disheartened if none of the above-mentioned solutions work for you. There is one more option that you can explore. And it’s called a mortgage.
You can use any of your valuable assets to borrow money from a bank or a private lender. Usually, a mortgage is offered against property, but there are other forms of it as well.
For example, if you own a high-value insurance policy you can use it to take a mortgage. Or if you own mutual funds or any other investment, you can place it as collateral to borrow money.
It is noteworthy that the value of your loan would strictly depend on the value of your asset. Perhaps, you can only take out a loan that values less than your asset’s value.
When you’re taking out a loan, it is important that you consider your options carefully. Making hasty decisions would rather harm you more than it can benefit.
You should compare the rates of interest, the fees to be paid, and the term of the loan. And most importantly, you should consider approaching reliable lending sources only.
A loan is a liability that needs to be paid, failing to which can affect your credit score and also hamper your future chances of getting a loan. So, it is better to make an informed decision rather than regretting a half-witted decision later.