Most financial advice focuses on the long-term: what can you do today to help make your retirement more fulfilling, or what kinds of investment opportunities have the best returns etc. While all these advice are extremely pertinent, they tend to overlook the necessity of having enough money to make ends meet in the current moment. Even if your monthly income is sufficient to manage all your expenses, there are many situations which warrant having a bit of extra money on hand to cover. These could be medical emergencies, looming debt repayment deadlines, overdue utility bills or critical household repairs; If you had the foresight to build up an emergency fund, this would not be so difficult but realistically speaking, very few of us have the ability to set aside some savings, let alone an emergency fund. Whatever the requirement might be, requiring extra cash when you have little to spare puts you in a dilemma - should you dip into your life savings to finance this short-term need?
Cash Loans for Short-Term Needs
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While the idea of going into debt for a short-term need might seem wasteful considering the interest you would need to pay, cash loans are sometimes the most ideal solution. Debt is not always a bad thing; in today’s society it is nearly unavoidable, and if used properly, can help you uplift your life in many ways. More often than not, cash loans are also the only solution left when you need to finance short-term needs.
Here are some ways you can get cash loans, as well as other alternatives to help you reach your short-term financial needs.
Personal Loans
While personal loans might seem the antithesis to the word “short-term”, more and more money lenders are offering personal loans for shorter durations. This decision was mostly facilitated by the rise of consumers who required a credit facility to cover more short-term needs, such as:
- Leisure travel
- House renovations / repairs
- Credit card debt settlement
- Wedding expenses
These kinds of requirements do not warrant going into many years of debt, so 1-2 year personal loans started becoming more commonplace. You may find yourself able to apply for (and receive) a personal loan of varying loan value for a shorter repayment term than you expected. However, if you require money urgently or for an emergency, personal loans might not be the way to go as they often take time to apply for and even more time to process.
Pros of Personal Loans
- Flexible loan values and repayment periods
- Professional service
Cons of Personal Loans
- Inconvenient to apply for
- Takes time to apply and process
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Credit Cards
Credit cards are often a lifeline during times of need. With credit limits usually exceeding our monthly incomes, they are a comforting line of credit available to us should we need it. Although credit cards have been given a bad reputation in the recent past due to the countless people who have drowned in credit card debt, when used wisely they are a very sustainable instrument to aid in streamlining your personal finances. Owning a credit card will cost you next to nothing (apart from the annual fee), as long as you pay your monthly bill in full and on time every single time.
Pros of Credit Cards
- Can help you save money (through cashback schemes and credit card offers)
- Can help you stagger large expenses (through instalment schemes)
- Acts as a permanent line of credit, with a large limit
Cons of Credit Cards
- If managed improperly, it is very easy to drown in credit card debt
- Cash withdrawals using a credit card have astronomical fees
Payday Loans
A credit facility that has been drastically increasing in popularity lately is the Payday Loan. Payday loans are unsecured loans offered by commercial banks as well as private money-lending entities, ranging in loan value, repayment period and fees involved. Created as the ideal solution for short-term financial needs, payday loans prioritise speed, convenience and reliability over other traditionally-expected loan features. Similar to credit cards, payday loans have also been misunderstood around the world and this is due in no small part to many customers having fallen prey to unethical money lenders. However, as payday loans start becoming more accepted, regulations have been brought in, making this industry more transparent and policed. Payday loan providers like OnCredit.lk are testament to this new age, focusing on transparent dealings above all else.
Pros of Payday Loans
- Quick - you can have your money in less than 24 hours
- Convenient - loan application does not require many documents and can be done online
- Reliable - unsecured loans do not require collateral so it is very likely your loan application will be approved
- Professional - you will be borrowing from a company, rather than from individuals
Cons of Payday Loans
- Higher interest - unsecured loans tend to have higher interest than secured loans to cover the lender’s risk of having no collateral
- Risk - there are many unethical money lenders looking to take advantage of unsuspecting customers
