It can be extremely frustrating when you need money either for business or personal reasons and cannot get your hands on some cash. Quick cash loans are available, but they often come at a higher cost than one would like to pay. Interest rates for these types of loans fluctuate, depending in large part on the credit-worthiness of the borrower.
For those individuals and companies that have good credit and a high FICO score, such loans are fairly easy to obtain. If you have a credit score near 800, you will get a lower interest rate and better terms on your cash loan than if your credit score is 500-600.
Traditional sources of getting cash fast include banks and credit unions. One can fill out a short application with one of these lenders and usually have a decision within a few business days. If you always need access to some quick money, you may want to set up a line of credit with your local banking institution. That way, you can borrow up to your credit limit at a reasonable rate and pay back the loan under your own terms.
Businesses often run into some short-term cash flow problems. They may have extended credit to their customers and have a large amount of outstanding accounts receivable. While waiting for payment, they can find that they need access to some money for daily operations or perhaps to meet the week’s payroll. Instead of telling the employees that business is a little slow and the employees will have to wait until next week to be paid, a company can avoid embarrassment and get a short-term cash loan to meet their current obligations.
Individuals also have pressing financial needs that make it necessary to use short-term cash loans. Again, access to such loans is usually directly related to an individual’s credit history. Those with the best credit almost always get better treatment when they apply for such loans.
There are other sources besides banks or credit unions where one can get quick cash. Most of us have probably used a credit card to purchase something when we did not have enough cash on hand. Credit cards are a source of financing, but should only be used when there are no other options. Typically, you will pay a high interest rate for the convenience of financing a purchase or borrowing money on your credit card.
Another way to have access to money when you need it most is to create a line-of-credit. One can have a relationship with their bank that allows them to draw $5,000, $10,000 or more at any time they want. Naturally, you will still pay interest on the loan, but the terms of repayment are usually left to the borrower. If you choose to pay off the loan in a month as opposed to a year, you will save on the cost of borrowing that money.
- Understanding Peer to Peer Lending (2011taxes.org)