Pros & Cons of Short-Term Loans

Video Transcript

"How bad do you need money? Hi this is Roger Groh at Groh Asset Management. Have you been sucked in by the adds where they say short term loans. Well you may be able to get a loan either from a private group or company or even the U.S. government. But if it's short term it probably comes with a hefty price tag. In some cases exceeding twenty-five percent per year, or more. Remember these are very short term loans, designed to be paid back in a day, a week, two weeks. And they are going to charge you out the nose. What are the pros and cons of short term loans? Well the good news is that in many cases you get them quick, they call them payroll loans in a lot of cases. Where you bring in a pay stub, they verify you are an employee, and they give you some money quickly. Say a day, maybe, it's quick though. The U.S. government also has a short term loan program designed for emergencies through their Stafford loan program. Geared more towards students, it's a way that a student can get a loan quick for a trip home, or for whatever it might be. Again, these are very short term loans, a week, two weeks, that's it. Then you are suppose to pay them back. The cons are because the loans are very short term in nature, but the interest rates tend to be very high. And you are going to pay out the nose for those loans How big is big? Think thirty percent, maybe more. And it's going to be substantial. How can you avoid that? Well the easiest way is don't take out a loan, but it might make some sense to eat crow, and talk to a friend or relative and have them give you the money at a more reasonable rate for the same time period. Remember, no loans are good news. I'm Roger Groh with Groh Asset, thank you very much for spending time with me."