Unexpected expenses happen to everyone. But what do you do when you’re caught in a situation in which you need money fast—a car repair, a medical bill, a month when your paycheck just won’t stretch—and you don’t have the funds to cover it? There are a few sources of funding you might consider.
Let’s run through several different options for getting $1,000 in cash fast.
✓ Payday lenders
Payday loans traditionally have been one of the most common ways for borrowers with low credit to get cash fast. They’re good for amounts of money $1,000 and less. The average payback term is around two weeks.
Payday loans can be good for low-income folks because payday lenders don’t check credit history—they only look at income, a bank account, and identification—so the borrower is almost guaranteed to get the loan. But it’s risky because a payday lender does not check to see if the borrower can pay it back.
What that means is sometimes borrowers have trouble paying off their loan. When that happens, borrowers often end up taking out more debt to pay the loan. And who do they often turn to? That’s right: Payday lenders again.
The Consumer Financial Protection Bureau found that more than 80% of payday loans are rolled over or followed by another loan within 14 days.
✓ Pawn shops
When you take out a pawn loan, you’re giving a pawn shop a valuable item in exchange for a cash loan. For example, you may have a necklace from your grandma that’s worth $1,000. The pawn shop will take the necklace, give you money for it—usually 25% to 60% of the item’s resale value—and you’ll have a set amount of time to pay the money back, plus interest.
If you do pay off the loan, you get your grandma’s necklace back. But if you don’t, the pawn shop then has the right to sell the necklace.
Pawn loans don’t check credit, so they can be a great option for a same-day loan if you don’t have a bank account or have a bad credit score. This is why an estimated 30 million Americans take out pawn loans every year. But pawn shops sometimes charge high rates of interest. They may even charge you fees to hold the item. And note that the resale value is likely going to be much less than what you paid for the item. Finally, there’s the chance that something you value could be sold and you’d never see it again!
✓ A loan from friends or family
Borrowing from your loved ones seems obvious. After all, they’re called your loved ones for a reason! Likely they’ll be able to get you the money fast, and they probably won’t charge you interest. Plus, it’s common: 60% of Americans have done it, according to findings by Bankrate.
But, money complicates relationships. In a 2018 survey, Bank of America found that 43% of people would be willing to end a friendship if that friend didn’t pay them back. Whether or not money is paid back, the sheer act of lending can create a power imbalance between the borrower and lender, which leads to tension.
If you’re going to borrow from friends or family, most experts recommend structuring the loan like a business deal. It’s good to provide some structure to your arrangement, but it also may mean you won’t see the money as quickly.
✓ Peer-to-peer lending
Peer-to-peer (“P2P” for short) lending is regular folks lending their personal money to borrowers who need it. Why would someone do that? Just like the banks: To make money. Peer lenders also get to charge interest on their loans.
Many websites facilitate peer-to-peer online personal loans, and they set rules for lending rates and applications. There are even less-structured options. For example, on Reddit you can find r/borrow, where Redditors will lend up to $1,000 to other users in need.
Depending on the platform you use, P2P lending can be a great option for borrowers with bad credit. The downsides? Peer-to-peer lenders may have higher rates or charge loftier origination fees (up-front fees you pay just for taking out the loan), so read the loan terms closely. And sometimes P2P lenders can take a few days to finalize their decision, so it can be risky if you need the cash fast.
✓ Installment loans
If you haven’t yet, read our in-depth breakdown of installment loans here. These are loans to take out from either a direct lender or a broker, who lend you money that you pay back over time, plus interest. Installment loans can be a great option for fast cash online.
The risk? The devil is in the details. Among the options we’re writing about here, installment loan providers may have the strictest requirements to loan you the money. They may look for higher credit scores, for example. Some providers also may take longer to get you your money. Make sure you read the loan terms closely.
Table 1: When you need a loan, know your options
|When do you have to pay it?||Interest charges?||Will your credit be impacted?||Emotional impact?|
|Borrowing from friends or family||Depends on your arrangement.||Depends on your arrangement.||No.||High. This can damage relationships with loved ones!|
|Payday loans||A few weeks—usually your next payday.||Depends on your state. If there’s no rate cap, it can range from 175% to more than 600%!||Depends. Most payday loan companies only report to minor agencies.||High. Payday loans have been shown to cause the most stress among different form of lending.|
|Pawn shops||1 to 4 months.||Variable. Between 5 and 25% depending on the state, often accruing monthly. Watch for services charges and other fees.||No. This is true whether you pay or you’re late.||High. You are having to sell something you find valuable. They may not even want your item, and the loan they give you will be a fraction of the item’s value.|
|Peer-to-peer lending||Depends on the site you choose. Can range from 2 years to 6 years.||Depends. Rates of 8% to 36% are common.||Yes. Most P2P sites report payment information to credit bureaus.||Medium-to-high. While it’s a loan, the fact that there’s another person behind it may weigh more heavily.|
|Installment loans||Months to years.||Variable. Usually 36% or below.||Yes.||Medium. It’s simply a type of loan, which is stressful, but there’s no extra baggage.|
What to consider if you go with an online personal loan for $1,000
You’ve thought through your options:
- You’re nervous about payday loans’ high interest rates.
- You don’t want to sell your mom’s necklace.
- You don’t want to stress any relationships.
- You don’t like the origination fees on the peer-to-peer lending sites.
So you’ve settled on an installment loan for your $1,000. Here are reasons to consider Klya:
- No up-front contracts. We only ask you for a contract once you choose the loan you want.
- No origination fees. We charge you only the interest rate we say we’ll charge.
- Instant funding. Klya is one of the same-day lenders who provides instant funding 24-7. Just apply and add your debit card. If approved, you’ll have your $1,000 loan right away.
- Go beyond your credit score. Your credit score only tells lenders how things have been in the past. We use credit scores, but we also look at income.
We’re tired of the cycle of low credit scores pushing borrowers to high-interest-rate products that are hard to pay back—thus hurting borrowers’ scores.
We’re here to break that cycle.