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Five ways to save on your next short term loan May 1 2015 The short term loan, often known as a cash advance or payday loan, is the type used by millions of people around the world to solve unexpected payments such as a car repair, medical expense or perhaps an unexpectedly high utility bill. For those who do not have the money in their checking or savings account to cover such as expense, a short term loan offers a seemingly perfect answer. The cash advance or payday loan is structured in such a manner that it will pay off an unexpected expense that ranges from $100 to $1,500. Most short term lenders require little in the way of credit score and instead focus on whether you have employment. Plus, they can be obtained in a matter of minutes which means that with online lenders you can have the cash by the next working day depending on your bank rules. However, with all the advantages that short term loans offer, there is the considerable interest rate that accompanies the advance itself. The interest rate is one that can be high and may make paying off the loan more difficult. Fortunately, there are five ways you can actually pay less on your next short term loan that will make it easier to fit into your budget. Shop around with several Lenders There are many different lenders of short term loans and each of them want your business. This means that you will be able to pick and choose from the various lenders which one has the best interest rates for your needs. Obviously, you’ll want to focus on those who have the lowest interest rate for their loans so that you can save the most money. By taking a little extra time to look over the various lenders, you may avoid having to pay higher interest rates and find one that will keep more money in your pocket. Take Out Less Money The less you have to take out, the lower your payback will be on the cash advance or payday loan. This is arguably the easiest and perhaps the best way to pay less on your short term loan and one that all too often gets overlooked by borrowers. The first step is figuring out how much you need and then raising or finding alternate methods of getting the money in addition to the short term loan. For example, if you can sell some of your unwanted items, work more overtime or obtain a loan from friends or family who will not charge an interest rate, then that will help make your short term loan smaller. After all, paying back $300 is considerably less than $500 or more when you toss in the interest rates for this particular type of loan. Negotiate the Interest Rate With some companies it may be possible to negotiate the interest rate. While you will probably not be able to get a big change, even having it reduced by a percentage point or two can translate into substantial savings on your part. Of course, many of these institutions may not be able to negotiate their interest rates, but you never know until you ask. You may find that there is at least a little flexibility, especially if the lending company needs more business. Be sure to bring up the subject of the interest rate when you are first making your negotiation about how much you want. If there is no early payment penalty clause, you might want to take out a little more money to get that lower interest rate and then pay it back sooner so that you can save more money in the long run. Pay Off the Loan Sooner The sooner you can pay off the loan, the less interest you will pay unless the company has an early payback penalty. Generally speaking, you should avoid lenders who have such a penalty plan in place. However, there may be no avoiding it depending on the size of the loan that you take out. A cash advance or payday loan is generally expected to be paid off fairly quickly anyway, but if you can pay it off faster and save a little on the interest rate, that will work better for your needs. Look for Discounts It seems that every short term lender has some type of incentive to bring in more customers, so be sure to look for any discounts that the company might offer. Quite often, the discounts are centered on bringing more people into their company to obtain a loan. So, if you know someone else who is also in need of a cash advance or payday loan, then this is the time to call upon them. However, you might find that there are discounts at higher loan levels which will have to be balanced with any early payment penalty that you might incur. Of course, the timing of having to get such a loan is often not of your own choosing, but it does pay to do some research now when you are not in need of the loan to see what the best companies are and the interest rates that they charge. Naturally, you can improve your financial position if you put some money back into a savings account which will help to offset any emergency payments you need to make. The more money you have on hand, the less you will need to borrow. In the end, it is best to not let the emotions of needing the money get in the way of your better judgment. By taking enough time to find the right lender, negotiate the amount if you can and seeing what discounts and the early payback penalties are, you can get the best possible short term loan that will meet your immediate needs without having to break your budget. Plus, by taking a few minutes right now before you are in need of such a loan, you can eliminate much of the work needed later in searching for the right lender. Click here to see previous blog entries
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