Short Term Personal Loans
Welcome,
It seems like after you finish high school you have lots of opportunities to borrow money (e.g. credit cards) and then with new responsibilities (e.g. college,car,bills, and etc..) having a lot of reasons why to borrow money. I wanted to go over all the ways you can borrow money in a short time frame and where you usually see these
I believe truly that a personal loan from among multiple options requires research to secure your best deal. Knowing what the fees are and what interest rate you may be paying is important, especially knowing the terms of each loan.
Short Term Personal Loan
Short term personal loans generally have a low maximum amount (e.g. $1,000 to $15,000), along with a short repayment term and high interest rates. Financial institutions, such as banks and credit unions, offer short term personal loans for those in need of immediate cash.
Payday Loan
Definition: A relatively small amount of money lent at a high rate of interest on the agreement that it will be repaid when the borrower receives their next paycheck.
These loans have much higher interest rates and fees than other short term personal loans, and therefore should only be considered in extreme situations. Many times, payday loans can make financial problems worse. To be eligible for a payday loan, you simply have to show proof of employment (e.g. a paycheck).
Line of Credit
Definition: Type of short term personal loan that helps with cash flow issues. Where the individual pays on the borrowed portion of their allowed balance, with the purpose to make purchases, balance transfers and/or cash advances.
A line of credit is most commonly known as a credit card.
Borrowing From Friends (Friendly Loan)
Definition: ‘Friendly Loan’ A loan agreement between associates. This type of loan is known as a friendly loan because the agreement is usually made between friends, family or acquaintances. These types of loan agreements are rarely legally documented and stipulations are usually verbally agreed upon.
If you know people that trust you you can do this!
Installment loans
Definition: An installment loan is a loan that is repaid over time with a set number of scheduled payments; normally at least two payments are made towards the loan. The term of loan may be as little as a few months and as long as 30 years. A mortgage, for example, is a type of installment loan.
This type of loan is made for a specific amount and is repaid in equal periodic installments over an established repayment term. Installment loans can be secured or unsecured; examples include mortgages, home equity loans and unsecured personal loans. Installment loans usually offer fixed interest rates and are a good choice for a one-time expense such as debt consolidation, paying off medical bills or funding a home improvement project.
In the sphere of short term loan you may see these loans at furniture stores or big department stores.
Car Title Loan
Definition: A car title loan is a loan for a small amount of money and for a short time. To get a car title loan, you give the lender the title to your vehicle (e.g. your car, truck or motorcycle). You also pay the lender a fee to borrow the money. You usually have to repay the loan in 30 days.
You can find these type of loans at pawn shops or as boutique shops.
ROSCA Finance
Definition: ROSCA Finance is a crowd-savings platform, based on a centuries old system of building savings communities. Thus in a ROSCA, a group of individuals (or friends in our platform), agree to meet for a defined period in order to save and borrow together, a form of combined peer-to-peer banking and peer-to-peer lending.
ROSCA Finance eliminates interest rates and it will show up on your credit like many of these other loans. I personally use this if I am able to sit back and plan about what I need to borrow money for.
Rules you should follow
- Borrow only what you need
- Lenders will usually offer more credit than you need
- Consider your reasons for taking the loan
- Take your time, do not let anyone pressure you
About the author,
Vince Tran is a millennial with a passion for water. He currently is working at Barclays and deals with credit cards and small loans. Connect with him!
LinkedIn: Vince Tran
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