Finding a resource to obtain emergency cash is often a stressful process, especially when the money is needed immediately. A quick cash advance or payday loan is often used when small money amounts will do the job. The bigger problems arise when more than a few hundred dollars is needed to cover the emergency cost.
Those individuals who have poor or no credit find a cash advance the easiest option for quick money. Loan amounts are limited by state regulations and more often than not by monthly take home income. A good lender will only loan a certain percentage of a paycheck. Unfortunately, when this amount does not cover the impending cost, people try to take out multiple loans with more than one lender. The desperation is understandable, but the approach to this kind of financial solution is detrimental to overall finances.
Paying off one loan is rough going on a budget. When both fees and principle make up the payment, it can set the budget back till the following paycheck comes. There are many times when those people take out another cash advance to pay off the prior one. It is cycle of debt which is very difficult to get out of. It is troubling to think about how an individual would handle getting out from under multiple short-term loans.
What else is a person to do when a cash advance is not enough? If credit problems are preventing a person from obtaining money on their own, secured loans may be one more option to look at. When you own your own vehicle, a title loan is something to look at. These loans will offer more money than a cash advance, but will be contingent on the fair market value price of the vehicle. Without good credit, it may be difficult to get a second mortgage or home equity loan. It doesn’t hurt to try, so if you do own your home, look to see what you may qualify for.
When you have a good friend or close relative who has strong credit, you may choose to attempt a loan with a co-signer. This person will sign as a guarantor on the loan. This means that if you do not make payments, the co-signer will be responsible to pay. For whatever reason, if you are no longer able to make the payments the lender will hold this person responsible for paying off the loan. Their credit score will ultimately be held hostage over this money. Be honest to yourself and to this person when you request their help. Not only can a failed loan ruin this person’s credit, but there is a strong possibility that the relationship will be ruined as well.
Like any type of emergency, when you know how to handle the situation, solutions come quicker. There is no running around trying to find an answer. The more self-reliable we can be the easier problems are solved. Not to mention the savings to be had when a person does not have to pay fees or interest on third party money. Be careful with cash advance loans. Just because they are easy to obtain, they may not be the solution but rather a creation of a new potential financial problem.