I received a question from a reader recently (by use of the “Contact Advisor” button at the top) regarding a way to get a personal loan quickly from a bank. The sad truth is that getting cash fast from a regular bank is not exactly something that is easy to do. There is credit history to check and other considerations. And while a small loan can sometimes be had in a day or two, the fact of the matter is that most banks won’t lend less than $1,000 out on a signature loan. And you need to be a customer in good standing for that kind of loan. So, as far as a personal loan goes, the fastest option is a cash advance lender. And those are rarely the kind of personal finances decisions that you want to make.
Cash advance lenders
We’ve all seen the ads: “Get fast cash NOW! Bad credit? No credit? You can still get cash easily.” These types of businesses are legal, but not particularly ethical. They charge steep fees (usually a percentage of the amount borrowed) that in some cases amount to as high as a 300% interest rate, if you were to hold the loan for a year. Usually, it works when you write a post-dated check for the amount you need, plus the fee. The lender then holds it until the date on the check (usually a day or two after pay day). If you can’t make the payment, you can extend by another two weeks by writing another post-dated check for the amount of the additional fee. This is not a good deal, but sometimes we feel as though we have no choice. It is important to note, however, that post-dated check cashing usually does not lend more than a couple thousand dollars. It really is an industry for those small, quick emergencies.
When you need money immediately
I remember a few years ago, before I really knew much about personal finances and financial planning for my future, when I made use of a post-dated check cashing loan. I needed to pay rent, my credit card was maxed out (not that a cash advance on a credit card is a good idea either) and I was in school. My waitressing job had just started and I had lousy tips. Besides, I wasn’t scheduled to work again until after the rent was due. So, I did the only thing I thought I could do (without crawling to my parents to admit I really couldn’t make it on my own). I got fast cash from a post-dated check loan. And, really, when you are broke and in a bind, it can be a good way to bail you out for small amounts of money. But the key is to do it only if you really need to, when all your other options are exhausted. And then to change your habits from there on out.
Saving instead of getting a loan
The key to strong personal finances, as I have since learned, is a good habit of saving. A savings account (I recommend an online savings account from ING or Citi) can be your fast cash loan if you find yourself in a bind. Granted, it does take a few months to build up, but if you can get into the habit of putting a couple hundred dollars from your paycheck into a savings account with a good yield, you will find that when you are in a bind, you can go to yourself for fast cash, rather than to a posted-dated check place. Just remember to pay yourself back.