Almost everyone in the world encounters financial problems at some point in their life. How you handle it is what sets you apart.
If you’re lucky, you have a large savings account you can dip into when your pet gets sick or your car breaks down. But if you’ve been through tough times, you may not have a cash cushion for emergencies. You may not even have enough room on your credit card.
At this point, borrowing a cash loan may seem like the only option, but is it the right one for your finances? With a little research, you can find out. Here’s what you need to know about fast online loans before you borrow one.
1. What can you claim with your finances?
Going online makes your search for a quick loan easier. You don’t have to leave your home to go to a bank during business hours. Instead, you can hop online and do a quick internet search anywhere, anytime.
With something like “fast loans near me” in the search bar, you’ll find millions of possible options on your screen in milliseconds. These results can be misleading for anyone with bad credit. Although you can click on all the links and browse the sites, you may notice that you are not eligible for the fast loan advertised.
You can save a lot of time by knowing your credit score. This way, if you have bad credit, you can modify your search to include bad credit installment loans.
Online direct lenders expect different things from their borrowers. While they can still check your credit, they also consider other financial details to determine if you qualify.
2. APR— Can you afford a quick loan?
Regardless of your credit score, you should always check the APR of any financial product you borrow.
APR, which is short for annual percentage rate, represents the true cost of borrowing money. Beyond the simple interest rate, the APR quoted for a cash advance, installment loan or line of credit includes all other charges applied to your account. These can include finance charges, closing costs, insurance and origination fees depending on the type of financial product you are borrowing.
By federal law, all financial institutions — from the biggest banks to the smallest online direct lenders — must share the APR in addition to the interest rate, because it reveals how much credit will cost you from start to finish.
Bad credit products tend to be associated with higher APRs, as some online direct lenders may raise their prices to compensate for lending to people with bad credit. Make sure you can manage how the APR affects your monthly payments to ensure you can afford it.
3. How will you handle the next emergency?
A quick cash loan acts as a band aid in an unexpected situation when you don’t have what you need.
But do you remember everything that was said about APR? You will pay more to borrow money than if you paid out of pocket. Whether you manage to get a good deal or are forced to pay a triple-digit APR, borrowing will always be the most expensive way to cover unexpected expenses. Your savings, on the other hand, are free to use.
This means you should think about how you can replenish your emergency fund while you pay off your loan fast. Sit down with your budget to see how much money you have to work with and track your expenses to spot unnecessary expenses that you can cut to free up more savings.
Keep these 3 things in mind
Refer to this guide whenever you need a little help in an emergency. They can help you better understand your options so you can choose the best one for your emergency.