How to Get Fast Cash

With rising interest rates and a softening housing market in states such as California and Florida, the number of foreclosures and notice of defaults has risen steadily over the past 12 months. Facing a foreclosure on your home can be a scary and unsettling prospect for a borrower. There are steps that homeowners can take to protect their most important asset from foreclosure proceedings. One note: if you are a homeowner and are in serious financial difficulty, you need to find a professional attorney to help you keep your home.

The most important step is to act – don’t put your head in the sand and expect it to all go away. Be ready to discuss your financial situation honestly and open.

A great first step is to get in touch with your mortgage lender. Borrowers often assume that the person or institution that is funding their loan wants them to default on their loan so that they may repossess the home. Banks and other lending institutions are typically large corporations that based their businesses and revenue projections on specific income levels each month. Foreclosures disrupt this process and may be seen as more of a headache than anything for these lending institutions that simply want to recoup their initial investment.

Prepare a series of questions for the lender that shows that you care about the situation and want to resolve it as easily as possible. A great source for this information is entitled, “Getting Out of Debt, Virginia Cooperative Extension publication 354-027″ and can be found online at http://www.vt.edu. This paper can help you formulate the right questions to ask and also has useful suggestions for how to handle your financial difficulties.

A foreclosure loan or emergency loan is simply one that helps you avoid foreclosure. It may be structured to help you reduce your debt down to a manageable level. Talk to your lender to find out the most appropriate loan to help you avoid foreclosure proceedings.

Payday loans have received a lot of negative press lately as states and municipalities try to regulate an industry that legally lends small amounts of money at interest rates that can reach a breathtaking 1000% per year. A less well-publicized variation on the payday loan is the car title loan, which requires the borrower to provide his or her automobile as collateral for the loan amount. While this type of loan is not as widely publicized as the payday loan, the car title loan is even more dangerous, as it could cost the borrower their car!

Payday loans, also known as cash advance loans, are unsecured loans. The lender trusts the borrower to pay back the money within two weeks. This type of loan is risky for the lender, but that risk is more than offset by the high interest rates charged for the loans, which can easily top 400% on an annualized basis.

A car title loan works differently, however. With this type of loan, the borrower offers his or her car as collateral and is often asked to provide a spare set of keys when the loan is granted. Should he or she default on the loan, the car will be forfeited and sold to repay it. In some states, the lender may sell the car and keep all of the proceeds from the sale, even if they exceed the value of the loan.

With collateral, one would think that the interest rates for such loans would be far less than for payday loans, but that is not the case. Nationally, interest rates for auto title loans average about 300% per year, which hardly makes the loans a bargain. In addition, the loan amounts rarely represent more than a fraction of the value of the vehicle. A loan of even half the vehicle’s value would be regarded in the industry as quite generous.

The same sorts of problems that occur with payday loans also happen with title loans. The borrower is often unable to repay on time and must extend the loan by paying an additional fee. Under some circumstances, it is possible for the fees to eventually exceed the value of the loan itself. And unlike other loans, the borrower is under pressure to avoid losing their car.

This type of loan is overwhelmingly weighted in favor of the lender, who will end up with something of far greater value than the loan should the borrower forfeit. Those who have short-term cashflow needs would be well advised to borrow from friends, relatives or a credit card instead.