You’re short on cash and need to pay rent within the next few days or incur late fees that you really can’t afford. If you’re strapped for cash, you might consider exploring some online loan options. Online lenders are somewhat sketchy and may charge rather exorbitant interest rates or fees, so be aware of this when using such services. Obtaining a loan through your bank or paying with a credit card may be better options. If you don’t qualify for a loan or a credit card, you may have to resort to these online services. Before borrowing money, however, make sure you completely understand the agreement you’re entering into. When you’re already short on cash, you don’t want to get stuck having to pay back more money than you borrowed. If you know you have money coming, though, an online loan may be an acceptable option.
Most online loans are unsecured loans, which means that you are not required to provide any form of collateral in order to receive the funds. This can be a good thing, because it means there’s no potential for you to lose some of your property. However, unsecured loans have downsides as well: the lack of collateral usually makes for much higher interest rates and a much shorter period of time in which the loan can be repaid.
When considering an online loan, do your research before agreeing to any service. Compare the fees or interest rates for different companies and determine which loan provider offers the most competitive rates. Also, be aware of when and how your interest or fee will be collected. Some companies directly deposit the loan into your bank account, but also take the amount loaned—and the applicable fees—out of your account when they’re due. This could spell big trouble if you don’t have the amount available when the loan company attempts to withdraw. Read and understand the entire loan agreement before applying for any money.
There are a variety of websites that offer suggestions on evaluating online loan offers. Tools like alexa.com can also help you evaluate the popularity of a site—the more visitors, the more reputable a lender may be (this is a general guideline, not the gospel truth)—and the Better Business Bureau can tip you off if a company has been the subject of an unusual amount of complaints.
Some companies instantly approve all applications for loans, since no credit check is required. As a result, just applying can result in you receiving a loan—and having to pay it back. For this reason, don’t fill out a bunch of applications without being sure you know what you’re doing.
Other online loan companies offer cash advances against your paycheck, and may require that you provide proof of income before they’ll offer funds. Be aware that receiving an advance on part of your paycheck from one of these companies will require that you give up that loan amount—and interest or fees—directly from your paycheck or bank account on payday. Essentially, you’re paying a lot of money to get a little money a little bit sooner—it may be worth it if you’re really in a tight spot, but generally loans of this nature are not the best idea.
Perhaps the biggest downfall of unsecured short-term loans is the very small amount of time you have to pay them back. If you’re not able to repay the loan in a timely manner, you will likely incur very large fees very quickly, which will put you into even deeper debt. Even some lenders admit that these types of loans are not for everyone. If you’re short on cash due to a last-minute emergency, but know you have more funds coming, you might check out an online loan. If your credit rating is decent, a bank loan or credit card charge is likely the best way to go when you’re short on cash. However, if you know you can quickly acquire the money to pay back an online loan and the associated interest and fees, this may be an option you can explore.