Have you ever been locked out unexpectedly and had to change your locks? What about a sudden plumbing emergency? Emergencies and unexpected expenses happen to the best of us, but knowing that doesn’t make the situation any better.
Life events like these might leave you in desperate need of cash. Before you panic and grab the quickest available fast cash loans, pause and consider—is that really in your best interest?
Fast cash loans may seem like a lifeline, but they often leave you in a vulnerable financial position. If you need cash quickly, you might want to consider these 5 best fast cash loan alternatives instead.
What is a fast cash loan?
A fast cash loan is a short-term loan that lets you receive funds either instantly or within the next day of applying. Lenders typically process fast cash loans quickly, and a borrower can access funds right when they need them the most.
This is in contrast to traditional bank loans, which usually take several days to process. Same-day or fast funding is what makes fast cash loans attractive despite their expensive interest rates.
How do fast cash loans work?
You can apply for fast cash loans in person or online. With a processing time typically between a few minutes to a couple of hours, fast cash loans are processed fairly quickly. At the latest, you’ll typically see the funds in your account within 24 hours.
You may not be required to provide collateral. But fast cash lenders will require you to provide information such as your Social Security number, checking account details, proof of income, and your physical address.
Fast cash loans are typically small, and they rarely exceed $500 on average. You might have the option to apply for up to $5,000 with certain lenders, but considering the outrageous interest rates and fees, higher amounts could trap you in an endless cycle of debt.
Fast cash loans are typically short-tenured, and repayment terms vary depending on the type of cash loan. Payday loans are expected to be paid back in full with your next paycheck.
Why should I consider a fast cash loan vs a credit card?
Both cash loans and credit cards are financial tools that let you have access to funds. But choosing the right option depends fully on your circumstances and requirements. Here are three factors to consider:
This is the most essential factor to consider when taking out any type of loan. States have regulations and laws that seek to set limits on fast cash loan fees and rates. Therefore, the cost of taking out quick cash loans will vary from one state to the next, with some states like Arizona banning payday loans altogether.
According to a CNBC report, Americans pay an average APR of 400% for fast cash loans. This high annual percentage rate is 20 times that of a typical credit card. It’s easy to see why a fast cash loan can throw you into a downward spiral of billowing debt.
You may have difficulties accessing a credit card with a sub-par credit score. On the other hand, you can often get a fast cash loan with bad credit.
A credit card comes with a set limit that depends on your capacity to pay, among other factors. As a cardholder, you are allowed to use funds within that particular credit limit without restrictions. You can usually get higher credit limits than you would with a fast cash loan. Even better, the interest is only charged on the amount used.
Fast cash loans give you a fixed amount just like a regular loan. And since your credit score isn’t taken into consideration, the loan amount is usually low.
Which fast cash alternative is the best?
In an emergency, fast cash loans can offer temporary relief until your financial situation improves. But you should steer clear of predatory payday loans, title loans, and other fast cash loans that could hurt your finances.
MoneyLion offers a fast cash alternative called InstacashSM. Instacash is an interest-free cash advance of up to $250 in as little as two days. You can also get funds instantly by paying a small turbo fee. In addition to the 0% APR and zero fees, Instacash does not check your credit or impact your credit scores.
Best for: savvy borrowers
Benefits: 0% APR, no monthly fees, no collateral required, no credit checks, non-impacting, fast.
Pricing: 0% APR, zero monthly fees, optional tipping, optional turbo fees
Credit Builder Loan
MoneyLion offers the Credit Builder Loan, a fast cash loan specifically designed to boost your credit score. The Credit Builder Loan is one of the best ways to build credit. In fact, More than half our members raised their score by up to 27 points within 60 days. Additionally, the Credit Builder Loan offers competitively-low APR and it doesn’t pull a hard credit check.
Best for: borrowers with poor credit scores who need loans to help build credit
Benefits: credit monitoring, access to Instacash, unemployment/alimony/child support re all acceptable forms of income
Pricing: competitive APR, $19.99/month fee
Fast cash loans to avoid
When you are in need of cash fast, you might be tempted to use a payday loan, title loan or pawn shop. Learn the details on these loans.
A payday loan is a quick cash loan where lenders extend high-interest credit based on your upcoming paycheck. Most payday loan lenders charge unusually high interest rates for a short period, so it’s best to avoid them no matter the emergency.
Best for: desperate borrowers
Benefits: no collateral required, fast
Pricing: payday lenders charge up to 780% APR in addition to other fees
A title loan is a secured short-term loan that allows you to use your vehicle as collateral. Title loans are usually fast, and they do not require you to have a good credit score. Plus, there are very few requirements for title loans. The one major downside is that the interest rates are outrageous, which puts you in a position where the lender can repossess your car if you default.
Best for: desperate borrowers with poor credit score
Benefits: few requirements, fast, no credit check required
Pricing: APR of about 300%
Pawn shop loans
Similar to a title loan, pawn shop loans allow you to borrow funds quickly against your valuables. The pawn shop lenders typically charge exorbitant fees and rates. They will sell off your pledged property if you fail to pay back on the agreed date.
Best for: desperate borrowers with poor credit scores
Benefits: fast, no credit check, no impact on your credit score when you default
Pricing: between 5% and 25% per month
Short on cash?
Even if you are faced with an emergency situation that requires cash that you do not have, avoid falling into a debt trap by taking on predatory fast cash loans.
MoneyLion has you covered with easy alternatives when you are short on cash. Join Credit Builder Plus today for only $19.99 monthly, which could grant you access to a Credit Builder Loan of up to $1,000 on short notice while building your credit score.
Not only do you get affordable loan access, but benefits include additional resources such as credit score monitoring, a credit reserve account that pays you interest on part of the loan held in reserve, and access to Instacash. These features will help you manage your finances better and build a healthier financial foundation.