If planned and matched with your financial goals, a loan might be a very valuable instrument. However, you may find yourself in a scenario where you don’t have a lot of time to organize your borrowing and you need money very quickly.
Short-term loans might help you get through unplanned financial problems like payroll disruptions or emergencies. Banks and other financial institutes provide a variety of short-term loans based on your needs. As a result, here are five short-term loans for emergency requirements in the United States.
1. Payday loan
Payday loans are a common type of borrowing in the United States. Small amounts of money can only be borrowed on a payday loan and in comparison, to a personal loan or a credit card loan, the interest rate on a payday loan may be higher.
To access this loan, simply upload your pay stub, bank account information, and a few other data to have the loan amount credited to your bank account the same day you complete the application. These loans can last anywhere from a few days to a few months, unlike a personal loan, which normally lasts 1 to 5 years.
2. Loan from an employer
Many organizations offer their employees the option of taking out a loan with a low-interest low interest rate or no interest for a short period. This type of loan is generally repaid monthly or according to the company’s policies. Before you seek a loan from your employer, do your research and think about the tax implications.
3. Loan against credit card
You can get a quick loan using the credit card you’re already using. The card provider can give you a loan based on your credit history, repayment capabilities, and credit limit. Pre-approval or pre-qualification is required for a credit card loan.
These loans are offered at a rate that is equivalent to that of personal loans. You can withdraw a larger sum than your credit card’s cash withdrawal limit and choose from a payback period ranging from three to twenty-four months.
4. Loan against mutual fund
Some lending institutions allow you to quickly get a bank overdraft by pledging your mutual fund units. Loans against mutual funds are available if the funds are eligible. Both debt and equity-oriented funds are eligible for the loan.
The most significant advantage of a loan against a mutual fund is that it is simple to apply for and obtain this loan even if the applicant has no credit history. Unlike other short-term loan products, this loan is secured, yet the processing time is minimal.
5. Loan against Public Provident Fund
If you have a PPF account, you can take a loan from the third to sixth financial year after you start it. This type of loan has lower interest rates than a personal loan. The interest rate on a PPF loan is 2% greater than the interest received on the balance in the PPF account, and the loan must be repaid within 36 months.
If the loan payback period exceeds 36 months, the interest rate will be increased by 6%. The maximum loan amount is 25% of the balance at the end of the second financial year before the year in which the loan is requested.
It is critical that you only apply for the loan amount that you require immediatelow-interest and that you are confident you will be able to repay within the specified time frame. Applying for a larger loan amount may place unnecessary strain on your other financial goals.