When You Need Some Extra Cash--A Guide to Finding the Right Loan  by Larry Denton

Almost every day, you are involved in some type of financial transaction requiring an educated decision. And we all need extra cash from time to time. Maybe you need extra funds to purchase your "dream" home, or a more reliable vehicle. Perhaps you want to provide that "fairy book" wedding for your only daughter, or take that once-in-a lifetime paradise vacation.

Sometimes it is simply not practical to make a purchase by saving up the cash, and that's where a loan can help. Nearly everyone needs to borrow at some time in their life--to finance a house, buy a new automobile or send the kids to college. But with so many different types of loans from so many different financial institutions, how do you decide which is best for you?

When you set out to borrow money you are barraged with the jargon of the banking industry. Revolving loans, points, adjustable rates, bridge loans, beacon scores, amortization and on and on and on. It is important to understand these terms in order to get your best possible deal at the lowest interest rates that are currently available. Take some time, research the terminology and become a smart money shopper.

Not many years ago, banks were the only "boys on the block" when it came time to obtain a loan. You got dressed in your finest outfit, got a haircut, and shined your shoes in advance of your meeting with the bank manager. Today, loan providers are everywhere. Supermarkets, credit unions, television ads, daily credit card offers in the mail, finance companies, and the payday loan building on the corner. Where do you start? Obviously the first question--how much money do I need?--must be answered. If you are shopping for a home, for example, you will not be using a credit card. Here is where your neighborhood bank can help. And even Uncle Sam--if you get a Veteran's Administration (VA) or a Federal Housing Administration (FHA) loan.

Other types of loans available include: car loans, business loans, debt consolidation loans, home improvement loans, home equity loans, refinance loans, personal loans, payday loans, and bridging loans (used to "bridge" a short-term financial gap when cash is needed for a special project). There are nearly as many loan types available as there are reasons to borrow money. Approval for loans is based upon a number of factors, such as age, employment, income, and credit rating.

Even if you have a poor credit rating or bad credit history, you can still find a range of "bad credit" personal loans, although the interest rates are generally higher than on standard loans. Beware, however, of the "payday" loans. Sometimes called cash advance loans, check advance loans, deferred deposit check loans or post-dated check loans, however check cashers or finance companies refer to them--they are EXPENSIVE.

Usually, a borrower writes a personal check payable to the lender for the amount needed plus a fee. Let's say you need a quick $100 and write a check to the lender for $115. You receive $100 and the lender agrees not to deposit your check until your pay day arrives three days in the future. It cost you $15 to borrow $100 for three days! You don't even want to know the Annual Percentage Rate (APR)on that loan.

When you need credit, shop carefully. Compare offers and institutions. Look for loans with the lowest APR. Compare the total finance charges, which include fees, interest and of types of credit costs. By going online you can obtain a multitude of loan options including: interest rates, length of the loan and the actual total monthly payment cost.

Learn the lending terminology, understand the different types of loans that are readily available and then make a choice that is best for your unique situation. In the borrowing world, there is no "one-size-fits all" solution. Your credit history, ability to repay the loan in a timely fashion, and the purpose of the loan should all be thoroughly considered.