You have an emergency. There’s a cost that needs to be covered. If you’ve exhausted all your options, there’s nothing wrong with applying for a short-term loan. The best places to get a short-term loan can be accommodating and easy to do business with. As long as you’re confident you can pay back the loan on time and according to schedule, you shouldn’t see any trouble in managing a short-term loan.
Short-term loans are a highly valued consumer loan relied upon by millions of Canadians every year. Some lenders can provide you with cash today such as payday lenders while other less flexible options can sometimes take weeks to qualify for and receive. Fortunately, in applying for a short-term loan, you have many options.
Short-term loans are often sought for small-scale expenses, medical emergencies, last-minute travel expenses, car repairs, home repairs, and to cover the cost of utility bills. A short-term loan’s repayment term is often 1-2 years and approval is much easier than applying for a more expensive, lengthier-term loan. Depending on the lender, you can either pay back your loan through an installment plan or return it in one large sum.
Here are seven of the best places to get a short term loan:
1. Your Bank
A great place to get a short term loan is from your bank. The first place to look for a short-term loan – and arguably the most advantageous – is your bank. Many banks offer a range of accommodating short-term loans.
That said, even though they already have a relationship with you, applying for a short-term loan here can be time-consuming and frustrating. They often require a credit check and can be subject to delays. The advantage, however, is that banks usually offer the best interest rate and fees.
2. Credit Unions
Credit unions are an alternative to banks. Credit unions can offer comparative rates on loans, often are based locally, and are a way to receive a short-term loan outside of your bank.
Unfortunately, credit unions have limits on the products and services they offer. Some fees can end up being higher in the long run if you are unable to adhere to the agreed-upon repayment schedule.
3. Payday Loan Services
Payday loan companies offer no credit check. They only ask to confirm your income and to provide evidence of employment. The application is fast and easy. You can apply for a payday loan today and receive your money within 24 hours.
Although the fees and interest rate are often higher, in terms of getting money fast with as few questions asked as possible, payday lenders absolutely are the right choice to make.
4. Peer-to-Peer Lenders
There are peer-to-peer lending websites and P2P loan services available that offer loans with payment plans of up to five years. Although this may exceed what some call a short-term repayment schedule, if you’re looking to make paying off a loan as quick and painless as you can, this is an option.
The drawback is that they use a similar credit underwriting system as everyone else which means the potential for a high interest rate.
No matter the lender, there are pros and cons to short-term loans. The pros are approval is easy and often fast, it doesn’t always impact or affect your credit score, and if paid in installments a short-term loan can actually have a positive impact on your credit report. The cons are the interest rates are higher, there’s a greater chance of running into predatory companies, unlicensed scams, and defaulting on this type of loan can cause a lot of damage to your debt amount.
5. Credit Card Cash Advances
The most efficient to get cash when you need it most might be pulling it from your credit via a cash advance. In an emergency, this works. However, beware. An interest rate on a cash advance can be extremely high and you will also be charged a fee for the transaction itself.
It’s going to be an expensive way to get a short-term loan but requires very little administration or doesn’t need an application.
6. Parents or Friends
Normally, we do not recommend going the route of friends because it can add tension to the relationship. Parents are a different story though, especially if they have some money to spare. Consider approaching them asking them for a short-term loan and even offer to pay it back including interest.
Whether you are approaching a family member or friend, it’s best to write up an agreement to minimize misunderstandings and to create a more solid deal between all parties.
7. Pawn Shop
If you have valuables that you can pawn in order to get some extra cash, this can be a workaround from going down traditional short-term loan routes. Jewelry, electronics, and collectibles are all things that are worth money. Shop around local pawn shops to get the best price you can.
You may want to do some research online on places like Amazon and eBay to ensure you’re getting a fair rate for what you’re trying to pawn.