The Best Short-Term Money Sources for Families

Finding Unclaimed Money

Before seeking a loan that carries a cost via interest rates, it’s best to seek free avenues of funding. Unclaimed money is one of those.

Certain family members may have wages or tax refunds that were paid but left uncollected. In these cases, they probably don’t even know they’re owed money. Luckily, there are several ways to find it.

The IRS can offer information on outstanding money owed from tax refunds. An FDIC search can show if any unclaimed funds exist due to bank failures. Unclaimed deposits may be waiting to be scooped up by members of defunct credit unions.  Enrollees of Veterans Affairs (VA) can see if any unclaimed life insurance funds are due. There are also state registries that can reveal similar information.

Grants for Families

If a family isn’t owed any money, they could still get free funding via grants, as long as they comply with regulations. These sums of money do not have to be paid back. Where do they come from? Non-profit organizations or the government, which offer grants totaling billions of dollars per year.

What can a family do with grant money? That depends on the grant, but the uses can be numerous. A teen can use the money to go to college. It can be used for home maintenance. Several grants also help people start businesses so they can secure their family’s financial future.

Getting Payday or Personal Loans

If unclaimed money and grants aren’t available, a family’s emergency could be resolved with a payday loan. In this case, a lender gives a borrower a short-term loan that they agree to pay back when their next payday hits. Sometimes referred to as cash advance loans or payroll loans, these types of emergency funding used to be more widespread. High interest rates triggering regulation has tarnished payday loans to the point they’ve become illegal in several states.

Before applying for a payday loan, some research must be done to see if it’s legal in the state where the family resides. Payday loans are currently illegal in the following states:

• Georgia
• New York
• New Jersey
• Arizona
• North Carolina
• Connecticut
• Maryland
• Massachusetts
• Pennsylvania
• Vermont
• West Virginia
• Washington, D.C.

If the family resides in a state where payday loans are legal, the next step is to find an adequate lender. This can be done online or by visiting a local storefront. In terms of cost, many lenders charge a percentage or a certain amount for every $100 borrowed. This amount is used to determine the annual percentage rate or APR. Before any agreement is made, the lender must disclose this rate to the borrower.

With the lender selected and the APR disclosed, the last step is to determine how much will be borrowed and when it will be paid back. Since payday loans tend to coincide with the borrower’s next paycheck, the maximum term is often 14 days.

Should a payday loan seem too costly, a family may seek financing from a personal loan. Although it may sound like a payday loan, both are quite different. Personal loans can have a repayment period of two to five years, while payday loans can max out at 14 days. Payday loans also come in smaller amounts than personal loans, while having higher interest rates. For these reasons, a payday loan should be used for minor emergencies.

Auto Loans for Family Cars

A common emergency many families face is car trouble. Whether a major repair is needed or the car needs to be replaced altogether, an auto loan can remedy the situation in a more direct manner than other forms of funding. There are a plethora of institutions across the country that will offer reasonable financing to help families get reliable transportation for work, school, and more.

Using a Credit Union

Becoming a member of a credit union is a great way to get access to short-term funds. Membership usually requires some type of donation to a non-profit organization.

Similar to a payday loan in form, but with better rates, a Salary Advance Loan is a new, popular way to get credit union funding. Credit unions also offer other funding options in the form of credit cards, low-interest rate mortgages, loans for rent, and more.

Small Dollar Loans

Somewhere in between payday loans and standard bank loans is the newly announced Small Dollar Loan, or SDL. It can provide lending for families with a maximum interest rate of 36% and a term of 90-plus days.