INDIANAPOLIS — The cost of borrowing money can be expensive.
First, ask yourself, why am I borrowing the money?
Sara Rathner, with NerdWallet, said "buy now, pay later" plans could be a good fit for something like a broken-down appliance.
"Oftentimes, if you make payments on time, you won't owe fees or interest," Rathner said.
Buy now, pay later loans, including Affirm or Klarna, help borrowers spread out their purchase.
"That way, you don't have to drain your savings, and then not have cash available to meet your other financial obligations," Rathner said.
If the buy now, pay later loan does charge interest, it is typically less than a credit card.
Another type of quick loan is a small-dollar loan. Offered by some banks, they let you borrow up to $1,000.
"Some banks will offer what are called small-dollar loans to existing customers. These are just like they sound — just small loans — and oftentimes a significantly lower interest rate," Rathner said.
Other banks may instead charge a flat fee for a certain dollar amount.
For example, Wells Fargo offers to eligible customers a flex loan "in amounts of either $250 or $500 for a flat fee of $12 or $20, respectively."
Small loans like these can compete with the very expensive payday loan.
"These (payday loans) charge interest rates in the triple digits. Typically, $10 to $30 for every $100 you borrow," Rathner said.
When comparing any loan product, compare the interest rates and whether or not they are fixed, come with fees, the loan length and late payment penalties.
That is because missing a payment could impact the other factors.
Rathner said it is important to understand your financial situation and your ability to pay that money back.
If you are in over your head, the consequences of not paying back money are real.
"You could be charged late fees or penalty interest rates, in some instances," Rathner said. "It can get very expensive to take on debt when you don't necessarily have a plan to pay that debt down."