Want fast cash but aren’t sure where to start? Millions of Americans ask themselves that question every year.

When unexpected expenses pop up or an emergency expenses arises, short-term loans are there to help.

Whether it’s an emergency car repair, medical bill or just getting to the next payday… Someone will offer you a loan to cover the gap.

The issue?

Not all short-term loans are created equal. Some options are affordable and convenient. Others will make you want to pull your hair out.

Here’s what you should know about each short-term loan type before you apply.

In an age where you can apply for loans online, a few clicks can get you approved and get cash the same day.

What You’ll Learn

• The Most Common Types of Short-Term Loans
• How Title Loans Work
• Everything You’ve Wanted to Know About Payday Loans
• Personal Installment Loans Explained
• Lines of Credit for Fast Cash
• How to Choose The Right Short-Term Loan

The Most Common Types of Short-Term Loans

Short-term loans come in all shapes and forms. However, the most popular options usually fall into one of five categories that you should know about.

Let’s take a closer look at each one…

How Title Loans Work

Title loans are secured short-term loans that utilize your vehicle as collateral. Thanks to online title loan applications these loans are easier to get now more than ever.

Borrowers can fill out an application from the comfort of their own home and be approved the same day.

Here’s how title loans work:

When you apply for a title loan, the lender will assess your vehicle and provide you with a loan amount based on a percentage of its value. You’ll give the lender your car title as collateral during the transaction but you get to keep your car and continue driving it while paying off the loan.

Title loans don’t require you to have perfect credit. In fact your vehicle is what secures the loan making approval quick and easy.

According to research done by Pew Charitable Trusts, 2.5 million Americans take out auto title loans each year. When they need fast cash, they use their vehicle.

Things to know about title loans:

• Loan amounts are determined by the value of the vehicle.
• Terms are typically 15-30 days.
• Borrowers are able to keep driving their vehicle while repaying the loan.
• You can get approved quickly by applying online.

If you aren’t able to pay back the loan you could lose your vehicle. Make sure you have a solid repayment plan before applying for a title loan.

Everything You’ve Wanted to Know About Payday Loans

Payday loans are by far the most recognizable type of short-term loan.

They’re easy to understand. Payday loans work by giving the borrower a small amount of money which is deducted from their next paycheck.

The loan amount is typically expected to be paid back within two weeks. Doesn’t seem too bad, right?

Here’s the kicker.

Studies have shown that this isn’t the reality. Data from the CFPB showed that about 80% of payday loans are rolled over into new loans.

The majority of borrowers who take out payday loans can’t afford them. They end up having to re-borrow because they can’t make their initial payments.

The average borrower takes out a payday loan with a yearly income of $30,000. They also spend about five months of the year in debt paying off these loans.

Five months!? Who considers this a quick fix?

Short-term loans like payday loans can be a helpful option for those who are careful with them. The fees do add up rather quickly when you continue renewing the loan.

Personal Installment Loans Explained

Not sure you can handle a lump sum repayment?

Personal installment loans are a great alternative to payday loans because they break up the repayment process.

Installment loans spread the balance over multiple months. The borrower makes the same payment every month until the loan matures.

Let’s look at why they’re becoming so popular:

Personal installment loans are predictable. You know how much you owe each month so there are no surprises.

Interest rates will vary depending on the lender and the borrower’s credit score. However, for borrowers who need longer to repay the loan or want to consolidate debt, these loans are a great solution.

Compare multiple lenders before settling on one. Credit scores will affect your rate but doing your research can save you money.

Lines of Credit for Fast Cash

Did you know you can borrow money against your line of credit?

It works like this:

Just like a traditional loan, you’ll receive a credit limit when you first apply. However with a line of credit you can draw funds as needed.

Let’s say you needed $200 this week. You would only borrow $200. When next month rolls around and you need $500 you simply borrow that amount as well.

Benefits of lines of credit include:

• Only paying interest on what you use.
• A $200 loan will accrue less interest than a $1,000 loan.
• You can reuse your line of credit as you pay it off.
• They’re flexible!

The drawback is you’ll likely need a better credit score than if you were to apply for a payday loan or title loan.

But for borrowers who qualify, lines of credit are one of the best ways to take out a short-term loan.

How to Choose The Right Short-Term Loan

Just like with any loan, everyone has different circumstances. When trying to determine which short-term loan is best, ask these questions:

1. How much do you need? – Small loans could qualify for a payday loan. Larger loans may need a title loan or Citi installment loan.
2. How soon can you repay the loan? – Some loans only have a two-week term. Others may give you months to pay back.
3. What assets or credit can you use? – Do you own a vehicle? If so, you could qualify for a title loan. If you have fair credit you could look into your installment loan options.

Thanks to online loan applications and direct lenders everywhere, you can apply for a loan to grow your business in minutes.

But just because you can apply doesn’t mean you should apply everywhere. Read the terms and know what you’re getting into before applying for any loan.

The Final Word

Short-term loans shouldn’t be taken lightly. However, they’re not the enemy.

When used responsibly they can provide a solution to your financial situation. Whether that solution is a title loan, payday loan, installment loan or line of credit…

There’s something out there for everyone who needs fast cash.

Just make sure you know what you’re getting yourself into and always pay your loan off on time.