Short Term Loans
Short Term Loans to Pay off Credit Card Debt
Many credit card consumers find themselves in debt and struggling to get out. At times a short term loan may seem appealing to assist with solving their credit card debt problems quickly. Payday loans, auto title loans, and tax return refund loans are examples of short term loans one may obtain to pay off credit card debt. Although these loans may be easy and quick to obtain, the consumer should be aware of the high interest fees associated with these short term loans.
Payday Loans
Payday loans are appealing because the application process can be done completely online and consumers can have the money deposited straight into their bank account the next day. These types of loans, however, involve very high interest rates. The annual interest rate on a 14 day loan can be as high as 400 percent.
Auto Title Loans
An auto title loan is another quick, easy loan to obtain with high interest fees. The loan company will hold the consumer’s car title until the loan is completely paid off. If the loan goes into default, the company has the right to repossess the vehicle so they may sell it to recover the money they have lost from the defaulted loan.
Tax Return Refund Loan
Tax refund loans, known commonly as refund anticipation loans, are given to consumers by banks who charge a fee for supplying refund recipients with the full amount before the government has paid out any money. In some cases, the interest rates for these types of loans can be as high as 700 percent APR.
Solving credit card debt problems is no easy task; however, obtaining one or more of these loans can put a consumer in a worse financial situation than before. Taking out a high interest loan is not recommended to consumers who want to use it to pay off credit card debt. Short term loans should be used for emergencies and all other options should be explored before choosing a short term loan plus the high interest fee associated with it.