Finding short-term loans is always considered a practical way to obtain financing during difficult financial times.
However, there are some types of short term loans that should be avoided unless it is the only option available.
These loans involve very high interest rates or occasionally the collateral requested is simply scandalous.
Here are some of the short term loans you should avoid:
The payday loan
Most people like payday loans because they offer a convenient solution when you run out of money before getting your salary.
Although convenient, these loans carry very high interest rates, estimated at nearly 400% per year.
In addition, the turnover costs, which are very high, it is possible that you pay the loan amount repeatedly.
The car title loan
This is another notoriously terrible loan to consider.
You borrow at very high interest rates, sometimes up to 300%, and the risk is that the loan must be repaid within 30 days and, if you do not, you risk losing your car or property that you have fully paid.
This is a very bad idea, and this loan should be avoided at all costs.
With pawnshops, you deposit an article such as a camera, a bike, an electronic article, etc. as collateral for the loan.
These lenders not only offer high interest rates, but they also charge storage and service fees, which usually result in high rates.
As a result, most people will eventually lose the items they pledged instead of paying back the loans.
Loans with cash advance
This may seem attractive because you already have a relationship with your credit card, they are instant, no paperwork is required and you do not have to sit and have an uncomfortable conversation with loan officers.
But the risk in these loans is high rates and interest rates.
Experts advise using these loans as a last resort, and only when you are in dire straits outside your city, where you need a service, but the provider does not accept your card, such as when your car goes out of town, and the mechanic does not accept a credit card.