During these hard times, many people get into a cash flow crunch and need extra money fast. Even with a credit crisis causing tight borrowing conditions in the economy, there are still ways to borrow extra cash quickly when that paycheck won’t come soon enough. Even those with bad credit can get cash as long as they have a job or collateral.
Pawn Shop Loan
A pawn shop is a store that loans money to people who drop off items of value as collateral, such as jewelry. No income or credit check is done, which makes getting cash very quick. In theory, borrowers pay back the pawn shop with interest and fees to reclaim their pawned items. However, some borrowers do not repay their pawn shop loan so the pawn shop sells their item. The value of the loan is usually only a small fraction of the collateral’s value.
The borrower would put up collateral such as a ring worth $150 for the pawn shop to hold. The pawn shop offers $10 for the ring. If the borrower accepts the pawn shop loan, the borrower gets $10 plus a pawn shop ticket to reclaim the jewelry for $14 within four months. The extra $4 represents four month’s interest and fees for the pawn shop loan.
The borrower can extend the loan by paying the $4 in fees and interest to extend the loan for another four months. Or the borrower can pay the full $14 to get the ring back. If the borrower does nothing, the pawn shop keeps the collateral and sells it.
Auto Title Loan
Those who own a car with a clear title can borrow against the value of the automobile with an auto title loan. With an auto title loan, the car becomes the collateral for the loan. Just like with a pawn shop loan, the loan is usually only a small fraction of the car’s value. Unlike a pawn shop loan, the borrower can continue to use the car. If payments are not made, the auto title loan company will repossess the car being used as collateral and sell it. Although there is no credit check involved, a source of income for repayment is needed by most auto title loan companies. More details on how to get an auto title loan can be found here.
Payday Advance Loan
A payday advance loan, also known as a payday loan, uses the borrower’s personal check as collateral along with a source of repayment. Payday loans require proof of income such as a paycheck. There are other requirements such as:
- Must be paid at least every two weeks by an employer.
- Minimum net income of $1000 monthly.
- No outstanding payday loan.
- A checking account that has been open for at least three to six months.
- Employment for at the past three to six months.
- No NSF, returned checks, or overdrawn activity in the checking account.
Once the payday loan is approved and funds are sent to the borrower, the payday advance loan company will withdraw the full amount of the loan plus fees or interest in two weeks. The payday loan can be extended by making a minimum payment of the fees and interest accrued, otherwise the full amount will be taken out of the borrower’s checking account.
All of the above fast cash loan options charge very high interest and fees, which sometimes exceed a 300% APR. Borrowers with temporary emergency cash needs should try very hard to pay these loans off as quickly as possible. Otherwise, the borrower’s debt load will increase very fast with the high interest or they will lose their collateral. Borrowers who know beforehand they cannot pay off these loans within a month should consider other options such as bankruptcy.