How to Get Short Term Money

Short-term money can be a reliable method to pay past due expenses fast. In the United States, households can consider a wide array of alternative options to obtain money when the traditional methods, such as a bank loan or credit cards, cannot be used and their financial stability is threatened.

In this guide, we offer information about where to find and how to get short-term money, and more.

Payday Loans

A payday loan is the most readily accessible source of short-term money in America. It provides a set amount of money to be repaid with interest by the borrower after a short period, usually when the next payday comes. Most lending stores verify employment or income (through pay stubs or bank statements) before approving a loan to make sure the borrower can pay them back as agreed. However, some lenders skip this process altogether while others operate with different requirements.

In the United States, payday loans have been in use since the 1920s. However, they became a widely used financial instrument after the 1980s, when small community banks collapsed due to deregulation. Since then, lending stores have expanded nationwide to fill the void. As of 2018, short-term lending is a legal practice in most states, with thousands of stores across the country. At the federal level, payday lenders operate under the regulations of the Consumer Financial Protection Bureau (CFPB).

Applying for a Payday Loan

The first thing to do to prepare for a payday loan is to verify whether the state allows the practice altogether. People who live in Georgia, New York, New Jersey, Arizona, North Carolina, Connecticut, Maryland, Massachusetts, Pennsylvania, Vermont, West Virginia and the District of Columbia cannot request a payday loan due to it being illegal. However, there are other options that struggling families can rely on, some of which we’ll explore further ahead.

The second step would be to find lenders willing to give the applicant the amount of money they require. These are usually located close to where the family lives, although online lenders have been rising in popularity. Regardless, most companies will charge a percentage or hard amount per each $100 they lend, which is then used to calculate the annual percentage rate (APR) given to the borrower before they agree to take the loan.

Most lenders operate their own set of rules to determine who is eligible for a payday loan. However, they generally ask their potential customers to have an active bank, credit union or prepaid card account. Some lenders require documents that certify income from employment or any other source. People asking for a payday loan must provide a valid identification document that certifies they are at least 18 years old.

After a lender has been chosen, the final step is to determine how much money will be borrowed and when will it be paid back. Most payday loans don’t last longer than 14 days and their expiry date usually coincides with the borrower’s payday. In some states, lenders can offer the option to roll over the loan, which allows the borrower to extend the lending period if they are unable to repay in time.

Other Alternatives

Families living in states without payday loans have to rely on other options to acquire short-term money to cover their expenses. The best alternative to consider would be loans and other financing options from credit unions.

To become a member of a credit union, most people are asked to donate a small amount of money to a non-profit organization. This is required to have access to several financing options that these unions operate to help their members cover all sorts of expenses. The Salary Advance Loan, which works like a payday loan but with lower interest rates, is a popular option among union members.

Credit unions offer financing options designed to cover certain expenses such as monthly rent or vehicle repairs. Some go as far as to offer low interest rate mortgage loans, credit cards and other forms of financial instruments.

A new financial instrument called the Small Dollar Loan (SDL) is another reliable method of obtaining short-term money. It was designed by the Federal Deposit Insurance Corporation (FDIC) with the help of more than 30 state and local banks. These loans serve as a bridge between payday loans and standard bank loans by offering the borrower an annual interest rate (ART) of no more than 36 percent and a term of 90 days or more.

An auto loan would be the best option if a family needs the money to cover car repairs or to acquire a vehicle. There are many financial institutions around the country that offer affordable loans to their customers so that they repair their damaged vehicles or acquire the transportation method they need.

Unclaimed Money

Many Americans are owed money and they don’t know about it. It may be due to tax refunds or back wages that were issued without the person being notified. In these cases, we’re talking about unclaimed money. Although the government does not operate a centralized location to find out if someone has unclaimed money, there are some state and agency specific resources that help figure out if this is the case.

People interested in getting back any unclaimed money they’re owed can make use of the local registries usually available in their state. Checking for tax refunds with the Internal Revenue System (IRS) or bank failures with the Federal Deposit Insurance Corporation (FDIC) are good ways to start. Members of credit unions that have failed can search for unclaimed deposits, while people enrolled in Veterans Affairs (VA) benefits can look for unclaimed life insurance funds.

Grants

Grants are a great opportunity to get the money you need. They are a sum of money usually provided by the government or a non-profit organization to other organizations, businesses or individuals. Unlike typical loans, grants don’t have to be paid back, though those who are awarded a grant must comply with some directives and regulations.

Whether to pay for college education, kick start a business or perform much-needed maintenance to your home, grants can be the best solution if you meet the criteria to obtain one. There are hundreds of agencies and organizations that are willing to help families and individuals achieve their goals, giving away billions of dollars every year.