Emergencies come up all the time and most require instant cash. You might not have the money at hand, but don’t expect the bank to rush your application process just because you said it was an emergency. However, there are mobiloan providers who can grant the cash in a matter of minutes. But do you know what this means for you?
There are a number of lending institutions which offer this kind of loans. Note that they are federally recognized. They are also required to operate responsibly in their lending practice, disclosing the involved costs upfront and informing their clients the loan is not a solution to long-term financial issues.
How do they work?
Interested applicants fill an online loan application form. The information is used in determining the credit limit. You can key in the amount of money you need as long as it is below your credit limit. The money will be transferred to the checking account immediately.
The credit limit calculations are done within seconds. However, there are cases where the lending institution is unable to verify the information provided immediately. You will have to wait if you happen to be in this category. Nonetheless, you will be given a time limit when a decision will be made. Typically, the decision is made before the end of a business day depending on when you make the application.
The fee and rates
There are two types of fees applicable when getting a mobiloan: fixed finance charges and a cash advance fee. The former is applicable on every billing cycle for unpaid loans and the latter is a one-time charge when you draw the money.
The fixed finance charge is between $10-$135 for every billing cycle
The cash advance fee can be between $-$3 for every $20 in advance.
How much can I get through mobiloans?
The credit limit ranges from $200-$2,500
The application process
You can take 3-5 minutes filling the application form. The information required can be found on your driving license, personal check, social security card or pay stub. In case additional documents are needed, you will be notified.
The repayment period
Many of the lenders will give you a month to 6 months as repayment period. Thus, think about your capability to pay back the loan within the stipulated period. Failure to do this will attract an additional fee. The longer you take to pay back the more you will have to pay.
Are mobiloans a good choice?
The mobiloans can appear to be a lifesaver, which they actually are at times, but there is a catch; there is always. You will be told that there is no money you will pay if you do not take the loans, which is right but are you sure you will not just use the money because you can? The problem many people face if they have subscribed to mobiloans is discipline. To many, the temptation is too great when the money is available, and they end up spending it just because it is there. The loans are meant for emergency situations, but once you use it the first time, it is hard to break out. You will be using the money, repaying and continuing the cycle.
To many mobiloans providers, the credit limit goes up with every repayment which can trick you into thinking you will be gaining more by repaying and taking another loan immediately. Seal the leeway if you can be tempted into remaining a slave to mobiloans. If you must, disable the account after you are done repaying the loan. Your financial status will thank you for this later.
Are the mobiloans bleeding you dry?
If you have ever used mobiloans, did you think of the interest upfront or just the money you will be getting. Remember these are unsecured loans and given the high risk, the interest is automatically high. If you are not using the loan for emergency, you will end up worse than how you started. Credit cards mostly charge 5% interest or less but the mobiloans attract an interest of up to 15%. Is it worth the trouble? Ask yourself that before you go on a spendthrift using the money you got from a mobiloan.
It is no secret that having a poor credit score is going to make your situation worse if you are trying to secure a loan in the short term. With bad credit, you will not get a loan from the bank to repair the credit score. Also, employers will use your credit rating in filtering job applicants. If you have low credit score, you lose. That is how mobiloan providers get clients! They only require you to have a checking account and a job. How bad your credit score looks is not a problem. Nonetheless, there is always an alternative. Instead of damaging your credit score further with mobiloans and letting them milk you dry, you can explore other alternatives.
a) Payroll advances
You can get a cash advance from your employer, which saves you on interest and processing fee. There are businesses which provide low-cost loans to their employers who are experiencing financial difficulties. You ought to be highly valued by the employer though to qualify for the loans. With a bad reputation at your job and a bad credit, you can only imagine how much far you can go.
Pawnshops are not popular for the reputation they have but they are legitimate, and you can get money from them quickly. You need to have a valuable item as collateral though. They are better than mobiloans in that losing the item does not come with a poor credit score, and you can always replace it later if you are unable to recover.
c) Credit card advances
Don’t get confused about the cost of credit card advances, they are still expensive. The interest rate is 29% and the fee is 15%, but at the end of the day, they are cheaper than mobiloans for longer-term financial solutions and larger cash advances. However, if you are borrowing in the short term, like a week or two, a mobiloan is cheaper.
d) Personal loans
You can apply for a personal loan from microfinance companies, banks and credit unions. The traditional lenders offer loans at lower rates but they will take long before processing it. Also, it is harder to meet their requirements in a few days.
There are personal loan providers who cater for people who have a bad credit score. The interest rates you have to pay on the loans are lower than what mobiloans attract. With regular payments done on time, you can rebuild your credit score to the point of qualifying for a loan from the traditional lenders. This is something you will never achieve with mobiloans.
These loans are processed just as fast as mobiloans. You do not have to visit the outlets for the application. The form can be filled online and on clicking send you will have the money within seconds.
e) Withdraw from a retirement account
You can get money from IRA or 401(k) temporarily without attracting fees or interest. However, this is only allowed once each year. Note that the money should be returned within 2 months. Otherwise, you will be charged a 10% penalty fee unless you are 59.5 years old and above. Additionally, you will have to pay income tax on the money you withdrew.
When in need of quick cash, you can decide to go for a mobiloan loan or a better alternative. Not to say that mobiloans are entirely evil, but they should be your last option. Among their drawbacks, the interest rates are the highest and you cannot grow your credit score.
The most important thing, no matter what you choose, is to ensure you are in a position to repay the loan in the outlined duration. When you do the math on what you have repaid if you take several months to clear the loan, you might realize the interest is more than 500%. Do you really think it is okay to pay such when you are not gaining significantly? I bet not!