Where do you turn when unexpected financial emergencies come your way? Sometimes, it is one large cost while other times its the sum of many smaller ones. Do you need to pay the mechanic in order to get your car back, or has the doctor prescribed a medicine that your insurance doesn’t cover? It’s a simple elementary cause and effect lesson. Actions or events are related. The result of too many bills may drive you to obtain a car title loan, a payday loan or running to a relative looking for a financial answer.
Financial advisers suggest that their clients save at least six months of budgeted costs so if there is some emergency down the road, the money will be there to cushion the blow. It sounds like a perfect plan in theory, but when someone is living paycheck to paycheck, saving money is no easy task. The short-term loan industry is booming and it is the direct effect of this deep rooted problem, most people do not have a savings account at all, never mind six months’ worth of living costs Car Title Loans Orlando.
What does the average person do when costs don’t fit into the budget?
*Most people will turn to credit cards in order to keep up with costs which are not covered by income.
*Conventional loans from banks or credit unions are available for those with favorable credit scores.
*Those who are homeowners have a few choices. Second mortgages are often used to help make payments. Others may sell their home and move into something more affordable.
*Payday loans attract those with poor or no credit.
*Car title loans provide more cash than a payday loan. These loans are only available for those who own the title of their vehicle.
*Some people consolidate their debt to lower the monthly demand.
*Debt settlement will lower monthly payouts as well as a third party company works at settling debt for a smaller amount.
*Bankruptcy is a last resort for those who owe multiple times the amount earned.
Credit counseling services are available to help people learn to work with their income for living expenses. These services will help a person create a budget that works. It almost always takes effort by the debtor to cut back on expenses. There was a PEW study results which showed that short-term money solutions like car title loans, cash advances and payday loans are used instead of having to cut back. When debt piles up and your credit is no longer access to cash, these short-term loans provide temporary relief.
Cause and effect with these types of loans are not always favorable to a person’s financial situation. If there is no money to pay off the short-term debt, the low cost of this fast cash quickly increases as high interest rages against the balance. Be careful with car title loans; these loans are secured by your vehicle’s title. If you default on this type of loan, you will lose your vehicle. When financial emergencies affect your monthly income, make sense of the action you take to resolve the problem. There is no relief when your effect is the cause of a new problem.