If you need money at short notice, you have a lot of options for this, the short-term loans and mortgage loans are part of it. Both forms of credit enable payment in a short time. Thus, the consideration arises, which of the two variants is the better choice. I have listed the advantages and disadvantages for you once.
The advantages and disadvantages of a short-term loan
Significant advantages of a short-term loan on the one hand, the fast processing of the loan request and the payment, which is sometimes possible within 24 hours. You place a loan request with a provider and within a short time this is processed. Some providers even provide a short term loan calculator, where you can already get an idea of what the credit will cost you.
A disadvantage of such short-term loans is the low duration of 1 to 2 months, but it must be generally considered that these loans are intended only for short-term financial bridging. Furthermore, the credit rating also plays an important role, the credit rating is too low, a loan can be rejected. At vexcash.com I came across an interesting article highlighting the advantages over a mortgage loan.
The advantages and disadvantages of a pawn shop
A big advantage of a pawn shop is that only the value of the deposit counts, so no credit information is requested. Since you agree with the offer of the pawn shop, the money can be paid to you immediately. The transaction is simple and uncomplicated.
However, there is not a pawn shop in every city and sometimes a longer journey is required. Furthermore, in addition to the interest still fees for insurance and storage may be incurred. Again, you need a valuable item that has the current monetary value of your required sum.
What do you need to know about both loans?
Both forms of credit have a short repayment term, so repayments must be made in a short time. Again, the interest rates are higher than a cheap installment loan and sometimes additional fees. These loans should therefore only be used if you already know that the loan can be repaid shortly. Calculate based on a financial overview, which option fits better with you.
Are there any alternatives to these loans?
A cheap installment loan would be an alternative, sometimes this can be paid out to you in a very short time. The longer term and lower interest rates are two major benefits. On the overdraft of the account should be waived, however.
Build up a financial reserve
If, in the future, you again need a higher amount of money in the future and would like to forego a loan, you will save yourself a financial reserve, for example 1000, 2000 or 3000 euros. This sum should best be paid to an additional account and serves as additional protection, very well suitable for this purpose is a savings account.
Summary – Is a short-term loan better than a pawn shop?
Both the providers of short-term loans and pawnshops offer you the opportunity to borrow money within a very short time in order to bridge a financial shortfall in the short term. The payout is usually very fast and you can therefore immediately have the money. Both options have their advantages as well as their disadvantages.