Find out how to borrow money fast.
Occasionally, an unexpected expense causes an individual to be temporarily short on cash, and he or she may need to borrow money fast. While it's certainly possible to get a fast loan, consumers should be aware of the negative impact that these types of loans often have.
One of the most reliable ways to borrow money fast is to go through family or friends. A company such as Virgin Money makes this possible in a more formal arrangement.
To borrow money from a family member using Virgin Money, the individuals involved agree on the amount, the interest rate, the payment schedule and any other terms of the loan. Virgin Money acts as a manager, creating documents, reporting to credit agencies, providing e-mail statements and offering year-end reports. Virgin Money can be used for mortgage loans, business loans, student loans or any other type of personal loan.
Other peer-to-peer lending companies, such as Prosper, focus on lending between strangers and may not have as quick of a turnaround time as loans from family members.
While a loan from a family member or friend may not come with as many financial ties, borrowers should be aware that emotional ties may accompany this kind of lending. If the loan is not repaid on time, the lending member may resent the borrower or have trouble collecting the debt without the use of services such as Virgin Money, which make the agreement legal. Borrowers also may want to consider putting up some type of collateral toward the loan.
Individuals who need to borrow money fast can consider a credit card cash advance. Many credit cards allow their customers to borrow money in the form of cash when they need it. Sometimes, the company even sends blank checks that can be deposited into a checking account. These checks also can be used to make large purchases in some cases. Alternatively, some credit cards have a personal identification number (PIN) that allows customers to receive cash from an ATM.
This is an option for those who need to borrow money fast, but there are many pitfalls. First, credit card cash advances carry a higher interest rate than credit card purchases, in addition to a 2-to-4 percent upfront charge. Additionally, interest charges start to accumulate as soon as the borrower receives the cash. This applies to money made from purchases as well. Those who avoid monthly interest fees by paying off the balance in full will find that there are interest charges on their next statement.
Furthermore, most credit card companies require purchase balances to be paid in full before a customer can start paying down the higher-interest cash advance. If an individual carries a large balance, this means that a short-term fast loan can end up costing much more than expected.
Payday loans are another way to borrow a small amount of money quickly. The name refers to the fact that the loan is only until the next payday. In order to borrow money, a payday loan company requires proof of income, proof of a permanent address and a valid bank account. The individual writes a check for the amount of the loan plus the company's fee, which is substantial.
For example, PaydayLoan.com operates under the laws of California, which allows the company to charge $17.65 for a $100 loan and $45 for the maximum loan amount of $255. This works out to a 460 percent annual percentage rate, significantly higher than the interest rate on other types of loans. The company will deposit the post-dated check on the day the individual receives a paycheck, typically in two weeks or less.
Payday loans should be used only as a last resort, if at all. The high fees involved sometimes cause individuals to become trapped in a cycle of debt. In fact, because of this, payday loans are illegal in New York. The Federal Trade Commission also warns about the use of payday loans.
In order to avoid the high interest fees that often come with a fast loan, consider alternatives. For examples, credit cards may be used to purchase food and everyday items. Additionally, lenders are often willing to work with borrowers to establish a payment system. If money is needed to pay a bill on time, consider calling the creditor to ask for an extension. The company may be able to wait until the next payday arrives.