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16:54 BST, April 9, 2020If you’re facing an emergency when you’re low on savings, you need to know where to get cash in a hurry. But with so many online loans available today, it may be hard to keep everything straight.
Do you know whether a loan or line of credit works best for your emergency? Take a look at this list to learn more about popular online loans.
Here are some examples:
A Personal Line of Credit
A personal line of credit (LoC, for short) is a quick way to get funds. You have the option to borrow only what you need while paying interest on only what you use.
What is it?
An LoC is a form of revolving credit that works a lot like the credit card in your wallet. You’ll receive a line of credit limit that you may withdraw money from as you need it as opposed to receiving this limit amount in one lump sum.
How Does it Work?
You’ll only have to pay back the amount of your limit you use, plus interest and finance charges.
These fees will vary depending on your financial institution and creditworthiness.
Each purchase ties up your limit until you pay it off. Once you do, you’ll free up your limit to withdraw against it without reapplying.
A Payday Loan
If you have rock-bottom credit, a payday loan may be a quick and convenient way to get cash. But it may come with higher-than-usual interest rates
What is it?
A payday loan (also known as a cash advance) is a short-term borrowing option granting you a small amount of money.
How Does it Work?
Just as you receive money in one lump sum, you’ll have to pay back what you owe (plus fees) in one lump sum. It gets its name because you usually have to repay it entirely by your next payday.
Broadly speaking, these products are an expensive form of credit. There’s been a crackdown on payday lenders, as their fees end up costing the equivalent of a triple-digit APR.
A Title Loan
If you own your vehicle, you may borrow against your car to get cash in an emergency.
What is it?
A title loan is a kind of secured personal loan. It’s generally a short-term high-interest product that gives you 25 to 50 percent of your vehicle’s value.
How Does it Work?
In the financial world, “secured” means you pledge an asset your financial institution may take as payment if you fail to repay what you owe.
As for a title loan, it uses your vehicle as collateral. So, if something prevents you from making your payments on time, your financial institution may repossess your vehicle.
What Will You Choose?
Do all of these options sound like they might work, or do none of them at all?
That’s okay!
Whether you opt for a payday loan or line of credit is up to you. Your finances are personal, and only you can decide if rates, terms, and conditions work for your needs. Keep researching until you find what works best for you.
Interesting related article: “What is a Payday Loan?”