When you are in need of some quick cash, a spot loan may be the answer. A spot loan is a short-term loan that allows you to borrow money against the value of an asset. This can be a great option if you need money quickly and don’t want to sell your assets outright. In this blog post, we will discuss what spot loans are and how they work. We will also provide some tips on how to qualify for a spot loan and what to do if you have trouble repaying the loan.
What is a Spot Loan Table of Contents
What is a Spot Loan?
Spot loans are business or personal loans that borrowers can use to cover unexpected expenses.
Spot loans are instalment loans and can sometimes be a smart alternative to short-term lending. They provide an affordable way to repay loans for a long-term customer and a better way for them to repay. People with lower credit scores are more likely to take out spot loans, sometimes they will be known as short term instalment loans.
Is a Spot Loan a Payday Loan?
Unlike payday lenders that take money from your pay check, with spot loans you have to directly pay back the loans. A spot lending facility acts similarly to an ordinary loan or an instalment loan where you pay the money back on a set schedule and the loan carries a high interest rate. The difference with a spot loan is that it allows you longer to repay the loan, meaning you are less prone to make late payments.
Why Do People Use Spot Loans?
People use a spot loan for different reasons. One reason is because they need money quickly and do not want to sell their assets outright. Another reason is because they want to avoid the high interest rates associated with payday loans. Finally, some people use spot loans as a way to consolidate debt or get out of a financial jam.
Some of the most popular things people take out spot loans for are:
- Car repairs and expenses
- Medical bills
- Expenses related to their mortgage
How Do I Qualify for a Spot Loan?
In order to qualify for a spot loan, you will need to meet certain criteria. These criteria may vary depending on the lender, but typically include things like having a good credit score and being employed. You will also need to provide proof of your income and assets.
What Happens if I Can’t Repay My Loan?
If you can’t repay your loan, you may be faced with a number of different options. One option is to work out a repayment plan with the lender. Another option is to sell the asset that you used as collateral for the loan. Finally, you may also be able to refinance the loan or extend the term.
How Does A Spot Loan Work?
Spot loan programs are often unsecured, meaning borrowers cannot secure any particular asset on the loans, so they usually pay higher interest rates. Other spot loan deals are secured against an asset that you own such as your house or car.
The annual percentage rate (apr) on the loan amount is usually high. Especially when compared to longer term credit options.
Applicants may not have enough credit history or financial income to access these longer term credit options with lower interest rates. Spot loans act like credit card debt in many ways and like credit card debt it should be paid on time every time.
If you’re looking to apply for a spot loan, you can apply online, saving you hours of calling around for someone to try and rip you off. You will need to provide your full name and addresses, social security number, incomes, and the purpose for the funds.
Spot loans vs. FHA Spot loans
The Federal Housing Administration offers condo purchasers an FHA-backed spot mortgage for an individual unit in a multilevel apartment building. This program enables borrowers who otherwise would never qualify to get loans in condo buildings. In 2010, the government banned such loans. This allows FHA-owned homes to receive financing, usually more advantageous financing, for the same home they previously would not have had.
What Happens If You Don’t Pay Your Spot Loan?
If you do not pay the loan on time you may be charged an interest fee until you pay the balance of the loan. Applicants not paid on-time will see a rise in interest rates that will result in multiple payments of the principle. It is important to determine if borrowers are able to repay the loan as interest accrues daily. Spot loans report payment activity to credit agencies, which can lower your credit score.
How To Apply For A Spot Loan?
Spot Loans can be a relatively straightforward procedure. If you have an income source and bank account and email, you may visit their website and complete the following steps: After the credit lender gets all the required information for their decision, your new spot loan application is likely to be approved or rejected very soon. If everything goes smoothly they can get the funds into your account within 1-2 days.
Disadvantages of a Spot Loan
Similarly to payday loans spot loans can have really high interest rates, sometimes up to 490%. If you can find a cheaper alternative to borrowing the money you need, that may be a better option.
Advantages of a Spot Loan
If you pay back your loan you can see your credit score improve and your credit history look a little better. This is as spot loan companies provide credit reports to credit reporting agencies, so their loans can help people improve their credit ratings.
Typical Spot Loan Terms
Except for extended repayment terms, Spot Loans has very few payday lending conditions. You will need to check the fine print of your credit agreement to understand the exact terms of your new loan.
Better Alternatives To Spot Loan
Getting a spot loan should be a very last option before a payday loan. Sometimes getting cash is difficult, but you could be more resourceful.
This is a list of alternative ways to the money you might need from an expensive spot loan”
- Credit card cash advance
- A low interest personal loan
- Using your credit card
- Asking friends and family for a short term loan
- Selling something valuable that you do not use anymore like a bike, car, tv or even jewelry
Are Spot Loans a Bad Idea?
Spot loan isn’t always bad for you, but often makes your life difficult when you cannot make the repayment on time. Like other loans a spot loan has a fixed interest rate however due to the longer loan terms the interest rates tend to increase.
What is a Payday Loan?
A payday loan is a short-term, unsecured loan that typically must be repaid within two weeks to a month. These types of loans are often used to cover unexpected expenses or to bridge the gap between paychecks.
Spot Loan vs Payday Loan
The main difference between a spot loan and payday loan is that the payday loan must be repaid in full on your next payday, while the spot loan can be spread out over several months. Both loans may have high interest rates and fees, so it’s important to shop around for the best deal.
Will Spot Loan Providers Check My Credit Score & Credit History With The Three Major Credit Bureaus?
Yes, if you’re approved for a spot loan, the lender will check your credit score and credit history with the three major credit bureaus – Experian, Equifax and TransUnion. This is to help them assess your creditworthiness and determine what interest rate to charge you.
What Happens If I Can’t Pay My Spot Loan Back On Time?
If you can’t pay your spot loan back on time, you may be charged an interest fee until you pay the balance of the loan. You can easily get into a massive debt trap if you. muss one loan payment, even if you pay it on the next business day. The interest rates usually balloon to the maximum APR the Credit Union can charge you.
Also make sure you call your lender on their customer services phone number if you ever feel like you might have an issue paying back you loan.