Emergencies can occur at any given moment and most of us do not really have emergency funds stashed somewhere. However, you do not have to worry much since there are types of small cash loans that you can avail on short notice. According to, www.loanstoplist.com, there are three main types of small cash loans which are personal loans, payday loans, and peer-to-peer loans.
If you are in need of money but can still wait for a few days, you can avail small personal loans from banks and credit unions. The banks and credit unions usually look at your credit history and income. The bank will then contact you after approving your loan. For personal loans, you can usually get a few hundred dollars to a few thousand dollars. You can then pay for the loan over the course of two years with an interest rate of 10%-12%.
However, if you have poor credit, you can choose to have a payday loan. The amount that you can get is usually from $500 to $1,000 and it depends on your quality of life. Unlike personal loans where you still have to wait for a few days to get approved, the payday loan can get approved on the spot. They also do not have an interest rate, rather they have a fixed fee which you have to pay aside from returning the amount that you borrowed. Since payday loans can give you money almost immediately, they must also be paid in a short period which usually is two weeks. As a form of security, the bank asks for access to your bank account or a check so that they can get their money back on time.
Peer to Peer Loans
Banks and credit unions fund the first two types of loans. On the other hand,the peer-to-peer loan is not. Individual investors fund this type of loan and it is usually done online. The individual investors fund whichever loan they want. The borrowers will be evaluated through their credit score and are given a risk level. In this type of loan, the amount that can be borrowed from the investor is dependent on the risk level of the borrower. Also if the borrower’s risk level is very high, the investor has the prerogative to charge the borrower with a higher interest.