We’ve all been there, a week from payday and low on funds.
From unexpected emergencies to unforeseen circumstances, sometimes your expenses can change and having access to quick cash is always a must. But for many there are times when options are limited, so what can you do?
If it’s a case of bills, one place to start can be speaking with creditors about extending your due date. Sometimes this can be accomplished without them charging a late fee, or reporting to the credit bureaus. Asking for an extension when there’s a cash flow issue can be one of the best options when trying to pay bills but know you’ll be late.
But what are your other options?
Well, more than you might expect. Finding quick cash to carry you over might be easier than you expect if you know the right places to look. If you haven’t been saving and stressed about your options, you can take a deep breath and relax as we discuss the possibilities.
Help from Friends or Family
Not everyone’s favorite option, it’s good to know there’s help when you need it. Many would prefer to use one of the above than ask, as a short-term loan from either puts you in debt to them, and in some cases this can mean beyond the financial sense.
Borrow From Emergency Fund
Assuming you have one, borrowing from your emergency fund is only a good idea if you know that you can replenish what you borrow. This can be convenient, but wreak havoc on your personal rainy day or emergency fund if you aren’t diligent about repayment. Doing so without repaying erodes its purpose, and could come back to bite you later. Similar options can include 401Ks and insurance policies, but these are also only suggested if truly out of options and a plan to put it back later. Otherwise, you might someday face an even bigger money mistake that you don’t want to.
Secured Personal Loans
Speak with your bank or credit union about taking a personal loan. While this comes with a fixed interest rate and repayment period, a loan inquiry does lower your credit score a little. The process for approval can be as soon as the next business day, but if your credit rating is a concern, this isn’t always an option. You also have some hoops to jump through. In addition to completing an application, you’ll also need to designate collateral. But one advantage is that the credit score requirements can be less stringent.
Unsecured personal loans
In addition to banks, choosing an unsecured personal loan also provides access to online lending sources. Additionally, it doesn’t require collateral, but often comes with higher interest rates and higher credit score requirements.
Much like a card advance, payday loans are quick, easy, but also have high interest. But when you need fast cash, there’s a reason why millions of Americans use payday loans each year. They often don’t require a credit check, or impact your rating so long as you pay them back. Just be sure you can make your payments on the due date if you choose this option.
Payday Alternative Loans
A number of credit unions offer payday alternative loans (PALs) at a lower cost to the borrower than traditional payday loans. In many cases, these are offered with lower interest rates and over a longer repayment period.
Auto Title Loans
Taking an auto or car title loan isn’t your best bet, but another option available. Using your vehicle as collateral, it’s an alternative, but a payday loan is probably a better choice if these were your only options. Should you default on the loan and not be able to pay, your vehicle may be repossessed. This could create a problem for getting to work, so you can pay off any loans or outstanding debt.
Credit Card Cash Advances
While this can provide much needed cash quickly, it comes at a price. With high interest rates that probably include additional fees as well, the interest begins to accrue immediately. While easy to obtain (if you have a credit card) they add to your balance, and can impact your credit rating if you fall behind in payments. At the same time, cards have their perks I suppose. Also, if you have a balance on your card and take an advance, that will raise your credit utilization ratio, which is part of how your credit score is calculated. If your balance exceeds 40% of the limit on your card, it is considered a big indicator of credit risk if not paid off quickly, and impact your credit score. Also, don’t expect the APR to be around 15% like with regular purchases, it’s more like 24% or more, and there is no grace period so interest starts accruing daily.
A number of companies provide employees the option of access to their wages by offering a paycheck advance to withdraw funds early. These don’t affect your credit score and can help in times of cash flow issues. While the concept isn’t new, more companies are offering it. Having access to a portion of the money you’ve earned can be a big help at times.
Depending on how soon you need the money, there’s a few other options available. Such as a peer-to-peer (P2P) lender, pawning or selling anything of value, finding work that pays today, borrow against your retirement account or life insurance.
When applying for many of these options, most will require some basic info like birthdate, address, as well as a social security number, work history, and a way to verify your income such as pay stubs or bank statements. Depending on the source of the loan, some may ask for additional details like mortgage/rent statements, whether you collect alimony and such.
The important thing to remember when looking for fast cash to help tide you over until your next payday is to make sure you get back on track with your personal finances as soon as possible. Pay down the loan or advance as soon as possible, and if this is a recurring issue consider speaking with a credit or debt counselling service to address your financial problems and create a budget for your needs.