Hard Financial Times? Tips To Keep You Above Water

Cash flow problems can hit just about any individual or small business at some point. There are times during the year that it’s possible to be flush with cash while at other times, cash might be tight. Getting through these periods of low cash flow is imperative, and doing so without paying lots in interest costs is even more important. It might be necessary to take out a loan to get through the tight times, but not all loans are created equal.

Payday Loans

Getting a payday loan might be a tempting option. These loans get their name because many people who take them out are attempting to improve cash flow until payday. These loans are not secured, and they come with pretty high interest rates, especially when they are taken out to an annualized basis. The biggest benefit that a payday loan can provide for a consumer is the ability to access cash quickly.

However, there are downsides to these loans. Most times, a payday loan will require payment in full within a short period of time. If the borrower is not able to pay off the loan, they have to take a new loan out, and the interest and fees can start to snowball from there. This fact makes it a good idea to look into payday loan alternatives, such as personal installment loans. These types of loans, such as those from MaxLend.com, are repaid in biweekly or monthly installments, which makes repayment easier to manage for most borrowers.

Credit Cards

Like payday loans, credit cards offer unsecured loans. This comes with a relatively high interest rate, although they are usually capped at 29.99 percent for even the worst risks. Most worthy borrowers will more likely get a rate around 15 to 20 percent. One negative that’s related to credit cards is the fact that those with low credit scores will have trouble accessing this source of capital because they will not be able to get approval.

For those with good credit, however, credit cards can be quite beneficial. Those who pay them off in full each month can get some pretty nice rewards for their trouble. They also can provide what’s referred to as float. This is the period of time between the statement closing date and the date that the bill is actually due. For those who pay off their bill in full each month, this is effectively an interest-free loan. It’s important to pay off the bill in full by the due date, or interest charges will start to accumulate, and they can compound over time to substantial amounts. Every situation is different, so be sure to evaluate before you decide between a credit card or a loan.

Installment Loans

These are basically personal or business loans that come from banks or crowdfunding sources that require payment over a period of time. They will generally have a set monthly payment and a set interest rate so that there is no surprise as to how much a borrower has to pay back. These loans come with lower interest rates than either a payday loan or a credit card, which can make them more attractive. Many installment loans will require some collateral, which is not necessary with the other options. However, an installment loan can be a solid option for those looking to minimize interest costs while getting access to some cash fairly quickly.

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