You may have heard terms such as “payday lender”, “personal loan” or “short-term loan” before, but if this is your first time utilizing these financial tools, you probably have a lot of questions about the process. Since your financial future is important, you want to make sure you fully understand these loans and how to get the most out of them before you sign up for one. Here are five commonly asked questions about short-term loans.
What Types of Short-Term Loans Are Available?
The two most common types of short-term loans are title loans and signature loans. When you obtain a title loan, you borrow money using an asset as collateral—in many cases a car, ATV, boat, or other similar item.
A signature loan is an unsecured loan, and in many cases the total amount you can borrow with a signature loan will be smaller than with a title loan. These are often called payday loans or cash advances, and most borrowers expect to pay these loans back when they receive their next paycheck.
What is Required for a Signature Loan?
Signature loans are simple because they don’t require any collateral beyond your signature (hence the name). It’s easy to apply for the loan, and you can get up to $1,000 or more to cover short-term emergencies and unexpected expenses, avoiding bank overdraft fees or huge credit card bills. No checking account is needed, all that you have to do is prove that you have a job or source of income, you’re a resident of the state in which you want to borrow money, and you have identification and a social security number.
What is Required for a Title Loan?
Title loans are the preferred option for people who need to borrow a larger amount of money and have an asset they can put up as collateral. The most common assets used are vehicles, such as a car or truck, ATV, snowmobile, or boat. In order to qualify, you must own the vehicle (i.e., you are not making loan payments). No credit check is required, so these loans work great for people who have bad or no credit, and you generally get to keep the vehicle while you are making payments on the loan.
What Kind of Repayment Terms Do These Loans Have?
This is a very important question to ask your lender before you sign. All lenders have different repayment options, but the best type of lender is one that allows you to have some flexibility to choose the payment plan that works best for your financial situation.
How Long Does it Take to Get the Money?
Another great benefit of short-term loans is the ability to get the money quickly. In most cases you can have cash within 24 to 72 hours, which is far less time than it would take to apply for and receive a credit card, or apply for a loan through a traditional bank.
Short-term loans are not the right solution for everyone, but if you think they might work in your situation, talk to a lender like Utah Money Center today to get all your questions answered.