02 Apr How to Know if an Instant Loan is Right for You
At some point, everyone ends up in a financial bind — whether it’s because of an accident, a medical emergency or any other unexpected financial stress. Fortunately, there are options that help you get back on your feet without signing away your life, or your good credit score.
If you’ve never heard of instant, or short-term, loans before, you’re not alone. They’re minor loans that are expected to be paid back quickly, usually within the year. They’re similar to payday loans, but with much lower interest rates and are usually offered by more reputable banks and credit unions. Plus, you can get one in a matter of minutes.
Here’s what you need to know if you’re considering applying for one:
Instant loans are, you guessed it, very fast and easy. They are fast cash options that typically put cash in borrowers’ hands within minutes of applying, making them ideal for a home emergency, medical crisis or another unexpected event, rather than credit card debt or student loans.
At banks and credit unions like Mountain America Credit Union, instant loans can be applied for online or through a mobile app at any time, day or night. It only takes about 10 minutes to apply, and the application is handled electronically without the need to speak to a loan officer or agent, which is a discreet alternative to meeting with loan sharks.
Instant loans can also save you thousands of dollars in the long run. Loans can be a scary concept, — especially for those with an affinity for gangster movies. Payday loans can charge anywhere between 196–600 percent in interest fees and often have hidden clauses in their contracts that can be difficult to work around. Plus, dragging out debt and accruing interest fees can leave anybody in a deep, dark debt hole with no easy way to get out.
Short term loans, on the other hand, charge interest rates around 28 percent. That means you pay up to thousands less in interest fees and get back on your feet quicker, protecting your finances and credit score from future damage.
So, instant loans sound like a good deal, right? They’re a great way to get money fast — usually.
There are, however, a few instances in which you should consider alternate options.
If you don’t think you have the funds to pay it back quickly, for example, you might look at other loans. A 28 percent interest rate is much more manageable than many exorbitant payday loan rates, but it still tacks on a significant amount to your debt owed. Only take out a short term loan if you are certain you’ll be able to repay the debt quickly and in full, such as the next time you’re paid.
And if you’re trying to build credit, a short term loan might not be very helpful. Not all short term loans are reported and paying back those that aren’t reported won’t help you build your credit score like a long-term loan or a credit card bill will.
All that being said, almost everybody has a financial emergency at some point in their life that requires cash on hand. If this happens when funds aren’t readily available, consider a Mountain America Credit Union instant loan.