Financial Wellness Minute: Emergency Loans

Get smarter about your money with this Financial Wellness Minute. I'm Patrick Voigt, from Mid Minnesota Federal Credit Union's Detroit Lakes Office. The unexpected need for a large amount of money is unnerving, especially if you don't have enough saved. When looking for solutions, there are some types of loans you may want to avoid.

• Payday Loans are short-term, high cost and are typically due by your next payday. The have hefty fees, averaging from $15 to $30 per every $100 you borrow.
• Title Loans like payday loans, are meant to be paid back within 15 to 30 days. They use 25% to 50% of the value of your vehicle in exchange for the title as collateral. If you fall behind on a title loan, you run the risk of having your car repossessed.
• Loans Against Your Retirement Plan allow employees to borrow funds from their account under hardship provisions. These may charge less interest, but over the life of this loan, will ultimately reduce your retirement savings because you are paying yourself back not adding to savings.

When you need to come up with money quickly, think about safer alternatives like borrowing from a bank or credit union or part-time employment or a side hustle to increase income. Want to know more or have a weekly financial wellness tip sent to you? Sign up below or, contact your local Mid Minnesota Federal Credit Union Office. Sign Up for a Weekly Financial Wellness Tip Mid Minnesota Federal Credit Union is federally insured by the NCUA and we are an equal housing lender.