Different Types of Short-Term Loans

Posted by James Richards on September 27th, 2019

If you ever find yourself in need of some immediate cash assistance, short term loans may be the best option for meeting your financial needs. This post introduces the many different types of short-term loans, then outlines each of their unique advantages and disadvantages. Read on to discover which type of short-term loan will work best for you.

Credit Card Cash Advances

Most credit card providers offer their customers the convenience of a credit card cash advance. While obtaining a cash advance can be as simple as walking to an ATM machine or writing a check at your bank, there are some high costs for raising money in this way.

Pros

It’s quick, simple and easy to get a credit card cash advance. In fact, your credit card will work at most ATMs the same way your debit card will. Some credit card companies even provide their customers with cash advance opportunities by using credit card checks.

Cons

Once you have the cash in your hands, the simplicity and convenience of this luxury are replaced by the very possible pain of high costs. You are likely to encounter high fees and only be able to access a few hundred dollars at a time unless you have a significant credit limit.

Line of Credit

A line of credit is another type of short-term personal loan that is great for people who have variable income and expenses, or for those who need some extra capital to finance a specific project or purchase. A line of credit is revolving, which means you can borrow from it whenever you need extra funds, as long as it is under the max limit of course.

Pros

A great benefit of a line of credit is that they are an open and flexible form of lending. When you open a line of credit, you’re approved to borrow up to a certain amount of money (kind of like a limit on a credit card), but you are not obligated to actually borrow any of it! Lines of credit can be left open for a long time as well, and since you only pay interest on the amount of money that you actually use, they provide a great financial cushion that can protect you from the unexpected.

Cons

Lines of Credit will only be beneficial for those with a significant credit limit. If you are having financial trouble already, then you may not get approved to open a line of credit, especially if your credit history has any issues on it. Those with poor credit scores will need to look elsewhere for funding.

Auto Title Loans

For those people with bad credit, auto title loans are one of the fastest, safest and most affordable ways to borrow money. Auto title loans let you convert equity in your vehicle into cold, hard cash, whereby you trade temporary possession of your pink slip for a lump sum loan. It’s a great deal for many people and can raise substantial amounts of money (depending on how much your vehicle is worth).

Plus, when you submit your application for a title loan, you’ll usually find out quite quickly just how much you can borrow, instead of having to wait around for days or weeks on end. But the best part about title loans is that you can raise the cash you want today without having to give up the use of your car! You continue driving your car as long as you don’t fall too far behind on your payments. As soon as you’ve repaid the loan, your title is returned to your name and your commitment to the lender disappears.