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Strapped for Cash: 5 Types of Loans to Consider When You Need Cash
Are you hurting for cash and trying to figure out the different types of loans there are? Read this article to learn more about loan options.
If you’re in need of some emergency cash to stay afloat during the current crisis, you’re not alone.
Recent surveys have shown that around 9 out of every 10 Americans are experiencing financial stress as a result of the current recession.
In addition, millions of people have reported being unable to pay for basic essentials such as rent, groceries, and utilities.
That’s why being aware of the many different types of loans that exist to help people who need extra cash is more important than ever.
Whether you need to cover personal expenses or sustain your business, knowing what kind of loans are there for people like you is essential.
Read on to find out the top five types of loans to consider if you need cash now.
Strapped for Cash: Secured Personal Loans
Secured personal loans are one of the most popular loan types for people in need of quick and easy cash.
Offered by banks and lending companies, secured loans offer money in exchange for the borrower stumping up any asset as collateral.
This could be your car or a certificate of deposit.
If you are confident that you can pay off the loan, then a secured loan is a sound option as they typically come with lower interest rates than other financial products.
However, be aware that failure to pay means that the lender can seize whatever asset you put up as collateral.
If you’re in need of some extra cash to tide you over until payday, then a cash advance could be exactly what you need.
These short-term loans are offered by a wide variety of lenders and are one of the more popular types of bank loans, and work by fronting borrowers cash based on the promise that they will pay it back when their paycheck comes in.
As this article from Captain Cash explains, cash advances can also be accessed by businesses in the form of merchant cash advances.
While interest rates can be high, the short loan terms mean that this is offset somewhat.
Credit Card Advances
Alternatively, one of the different types of loans available is credit card advances.
These work similarly to cash advances, with the difference being that the loan is borrowed against the available balance of your credit card.
This is also a short-term loan, as you will often be expected to repay the following month.
However, it can be a cheap and quick way to secure cash. Just make sure to check what the transaction fees are.
Retirement Fund Loans
The recently signed CARES Act, which is a direct response to the current financial crisis, allows you to borrow from your 401K or IRA without incurring the usual penalties.
If you’re in need of cash now, you can withdraw up to $100,000 from your retirement fund without incurring the usual 10% early withdrawal fee.
You will also be able to spread out your tax obligations over three years, rather than having to pay the same year that you make the withdrawal.
Finally, if you’re a business wondering “What kind of loan can I get?”, then peer-to-peer (P2P) lending might be just what you need.
Basically, P2P works by allowing strangers to loan you money as a form of investment, much like any formal investor would do.
It is a great form of financing for small businesses who might feel like they cannot access larger forms of capital.
Just be wary of interest fees charged by different P2P lending platforms.
Strapped for Cash: Learn More About the Types of Loans Available
Now, you’re more aware of the different types of loans available to help you through this crisis.
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