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Payday Loans and Other Options

For those in need of a short-term loan, a payday loan might seem like the best option, and for many people, these services might be the best solution.

However, there are several ways to secure short-term financial assistance. Before deciding on one particular option, it is smart to examine all of your options carefully to ensure that you choose the best one for your needs.

Option 1: Payday Loans

These are short-term financial services that require repayment within 14 to 31 days. Unlike longer-term options, these services typically need to be repaid at one time in one lump sum.

To secure a payday loan, a borrower must have an active checking or savings account. The borrower also must have some form of income, either through employment or a government program, and must be at least 18 years old.

They are available through physical check cashing stores or via the Internet. With online lending services, the borrower is able to have the funds directly deposited in his or her bank account - an added convenience.

These services do come with some strings - the interest associated with these types of advances is much higher than the interest rates for other types. Starting around 400 percent, APRs (annual percentage rates) can increase even further if the borrower is not careful and does not repay the amount owed by the original due date.

Option 2: Credit Card Cash Advances

Another way to obtain a short-term loan is a credit card advance. If you have one, chances are that your provider offers a cash advance option.

Typically, you can secure funds by calling your card company directly, plus many companies also make it possible for customers to request a cash advance via the Internet.

These services can be repaid in a similar fashion as other routine charges - you can elect to make the minimum monthly payment assessed by the provider or you can make larger payments in order to eliminate the debt quickly and accrue less interest.

Unless you are taking advantage of a special offer, the interest rates typically are higher than they are for regular purchases. Additionally, most companies will apply payments toward the balance with the lowest interest rate first, so if you are not careful, you could have a cash advance balance sitting with a high interest rate for an extended period of time.

The best approach to securing this type of loan is to use a card that does not have a balance already and then do your best to avoid using it again until the cash advance balance is paid off.

Option 3: Unsecured Personal Loans

A third way in which to address a short-term financial need is an unsecured personal loan.

These types of borrowing services are similar to standard ones, but often come with a shorter repayment period. These types of services also come with higher interest rates, but if you know up front that you will not be able to take care of the amount owed within two or four weeks or even four months, this might be the way to go.

If you are unable to take care of what you owe within the repayment period, the finance charges will begin piling up. For a credit card cash advance, it can be difficult to avoid using the credit card for an extended period of time while trying to cut down on the debt. For these reasons, an unsecured advance will cost you less in the long run if you need more than a few weeks or few months to take care of the debt.