By Chris Buchheit on May 25, 2010
.jpg.aspx?width=75&height=75) We have all been there – your savings lose value, your portfolio tanks, or your equity decreases. Unfortunately, such is the nature of market economies – they rise and fall. Occasionally, there might arise a time when you might be forced to take out a small amount of cash for a high interest rate to pay bills.
While the best method of securing your finances lies in foreseeing economic downturns and planning accordingly, sometimes households are not nearly as prepared as they should be. If you find yourself in a crunch, be sure to evaluate your situation as best as possible.
After evaluation, you might find that a short term loan is a good alternative to cold showers. However, these types of loans, like every loan, must be taken very seriously and with a grain of salt. Yes, you will be awarded cash from your bank if you qualify, but often times the interest rates on them are very high.
The best time to use a short term loan would be the time right before getting a pay check. If you, for example, need to pay important bills, but your pay check is a few weeks away, a short term loan might be a good alternative to getting your power turned off, or even resorting to getting the hydraulics removed from your ride. The reasoning behind this is that there is a large sum of cash coming your way very soon, but you need the cash slightly sooner. If you get the loan paid off pretty quickly, chances are you will not incur too much of a deficit with the interest rates.
However, like every other financial decision, short term loans are something that need to be considered heavily before taken. If your finances are not as secure as you would like them to be, perhaps taking on the high interest rates of short term loans would be too much of a risk for you. The long term is ultimately what matters the most – answering the age-old question if they will hold up despite obstacles in the markets.
Note: Traditional payday loans are never worth the cost. Title loans are secured loans with terrible terms that can cost you your vehicle. Most commercial banks and credit unions offer short term loans with much more favorable repayment terms.
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