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If you’re short on funds for groceries while waiting for your next paycheck, you may be wondering what financial tools are available. Luckily, online loans are a quick cash option that may be at your disposal. Here’s what you need to know about online loans and the pros and cons of using one to buy groceries.
What is an online loan?
Online loans refer to a group of various financial products offered by online lenders. This could be one of several types of loans, including installment loans, lines of credit, and cash advance loans.
Online lenders have grown in popularity over the years because of their speed and convenience. From the comfort of your own home, you can apply for one of these loans and find out within minutes whether you’ve been approved.
When using an online loan for groceries makes sense
There may be several instances where buying groceries with funding from an online loan makes sense:
Your bank account balance is low
Many Americans live paycheck to paycheck, and sometimes they fall short of covering all their necessary expenses. If this has happened to you, not to worry. An online loan can help you cover your essential day-to-day expenses like groceries until you receive your next paycheck.
Prices are higher than normal
Throughout 2022, inflation peaked at a 40-year high. This caused the price of nearly everything to go up. These prices may mean you need more money to buy the groceries you usually get for less. In this situation, assistance from an online loan could help give you the money you need to make up the difference.
You can’t use a credit card
If you have had trouble with credit or don’t have the ability to apply for a new credit card, then getting an online loan may serve as a helpful substitute.
You need same-day funds
Many online lenders offer instant approval and same-day funding for loans. So, if you need cash right away to buy groceries, an online loan can be a quick and easy option.
The drawbacks of using online loans for groceries
While using an online loan can certainly be convenient, there could also be a few potential issues:
Fees
Online loans are not free. For each dollar that’s borrowed, there will be an applicable interest rate and fees. Borrowers need to understand these charges and only apply for as much as what’s truly needed. Additionally, online loans tend to have shorter terms (sometimes as short as two to four weeks), and even where extensions are available they typically come at the cost of additional fees, which can quickly pile up. You should have a plan to reduce spending or increase income in the short term in order to make sure you can pay back the online loan quickly.
Potential denial
There’s no guarantee that you will qualify for an online loan. This is especially true if there’s been a change in your financial situation, employment status, or if you already have too many other outstanding loans. Luckily, some online lenders have less strict requirements, so you may still be able to find a loan that you can qualify for.
The bottom line
An online loan can be a great idea when you’re short on the funds you need for groceries. However, borrowing money too often does come with a cost. When it comes to your groceries, be sure to use loans as a temporary strategy and focus your efforts on either increasing your income or making adjustments to your budget.
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