Car title loan
A car title loan is another way to access emergency cash using an asset. Instead of using your home equity, like a HELOC, a car title loan uses your vehicle.
The lender uses your free title – one not tied up by a lien from a bank – as collateral on a short-term loan. Other than requiring a vehicle without a loan or other lien on it, these loans often have minimal approval requirements.
A car title loan may seem like a great option on the surface, online payday loans Minnesota but the FTC warns consumers to steer clear if possible. The annual percentage rates are often in the triple digits, according to the FTC. This high APR is usually due to the additional fees these lenders charge, including up to a 25% monthly charge just for financing the loan.
If you default on a cart title loan, the lender may also repossess your vehicle, making it difficult to get around and find work.
Credit card cash advance
A credit card cash advance is a short-term loan issued by your credit card. It’s relatively easy to get and requires no credit check or income verification.
You can get a credit card cash advance from an ATM using your PIN (personal identification number). If your card issuer didn’t give you a PIN, you may have to call the customer service number on your credit card or go to the issuing bank to get the advance.
While a cash advance provides quick and easy access to emergency cash, it comes with a few serious downsides. First, cash advance interest rates are generally at least a few percentage points higher than the base rate for using your credit card for purchases. Also, your credit card may charge a fixed fee of $20 or more for each cash advance.
A payday loan is a type of cash advance that leverages future income. These short-term personal loans give you the cash you need now. If an emergency pops up, and you need to borrow $100 until your next unemployment check arrives in a week, a payday lender can offer quick cash without a credit check.
To get that $100 payday loan, you just write out a check for the amount you need plus the lender’s fee – say $15, meaning you would write a $115 check – and the lender gives you the $100 cash or deposits it into your bank account.
The lender won’t deposit the $115 check until the agreed-upon due date, which is usually your next payday. If you can’t afford to make the payment when it’s due, the payday lender may agree to roll the loan to your next payday for another $15 fee.
This may sound convenient, but the FTC warns consumers to use caution with these lenders. The biggest issues are in the repayment terms, as that $15 fee adds up to 391% APR on a 14-day payday loan. The APR continues to balloon each time you roll it over too.
Consider how emergency loans will affect your future
Emergency loans for unemployed people may be challenging to qualify for, but they’re far from impossible. In many cases, the hardest part is determining what does and doesn’t qualify as income for the various types of loans available. In most cases, though, any steady flow of incoming cash counts, including less traditional sources like alimony, child support, recurring interest or your spouse’s income.
If all else fails, there are alternative cash loans available that require almost no income verification and don’t consider your credit history, including payday loans, cash advances and car title loans. You must proceed with caution when considering these options, but with a firm understanding of the risks, you’re in a position to make an educated decision as to whether or not these loans are right for you.