If an unexpected expense suddenly came up, you know sometimes it’s not easy to come up with the money right away to cover it. Most people don’t have any emergency funds waiting in their accounts. Fortunately, an emergency loan can help you get the fast funding you need.
What Are Emergency Loans?
Emergency loans are considered unsecured personal loans. They are designed to help you borrow money to pay the cost of your unexpected expenses. The loan amount usually depends on how much you need to settle the cost. However, emergency loan amounts are typically small- they can range from $250 to $1,000.
This type of loan usually has a simple process and is pretty fast. Deposits sometimes come after approval or within a day or two. Furthermore, emergency loans don’t require you to put up collateral. This means your assets will not face any risk of repossession.
Terms and conditions of personal loans vary from one lender to another. Hence, it is crucial to compare different lenders. In doing so, it is essential to consider the loan amount you can borrow, interest rates and fees, minimum credit score required, and the income requirements.
Types of Emergency Funding
Below are the options you have for covering your unexpected expenses:
Personal loans can be taken advantage of for almost any purpose, including funding your unexpected expenses. This type of loan has a term that usually runs from a year to several years. Moreover, personal loans can help you get more money than the other options listed below.
Lenders usually consider your creditworthiness in applying for a personal loan. While some lenders can quickly give you the amount you need, others may take several days to deposit. Furthermore, personal loan interest rates depend on the lender and your credit status.
Payday loans can give you small loan amounts, which are $500 or less. This type of loan is popular for being easy to qualify. This is because lenders don’t do any credit checks in assessing your loan application.
Payday loans usually come with higher interest. Moreover, they usually have a fast turnaround. The repayment term can either be two weeks or your next payday, giving you little time to pay back the loan in full.
A title loan is a secured loan. You hand out your vehicle title to the lender for you to borrow money. Furthermore, if you fail to pay back the loan, your vehicle can get repossessed.
Credit Card Cash Advance
If you already have a credit account, things will be easier for you. You just simply get your card, go to a bank branch or an ATM, provide the pin, and request the funds. Once that is done, you can then use the cash to settle your unexpected expenses.
Credit card cash advance usually comes with a higher interest rate compared to your regular purchases. Moreover, there is no grace period. This means the interest rate will start to accrue immediately.
Credit card issuers usually charge a cash advance fee. This fee can cost you an extra 5% of the transaction amount. Furthermore, credit cards have a cash advance limit that is lower than your credit limit. It will help if you check with your credit card issuer to know how much cash you can borrow.
Where to Get An Emergency Loan
The following are the types of lenders that offer emergency loans:
If you already have an account at a specific bank, you have a good chance of taking out an emergency loan. Banks usually have a different process than other types of lenders.
For instance, some banks have a higher income or credit score requirement before approving your application. Also, they don’t release money that quickly. Hence, it is essential to check how long it will take for you to receive the funds.
If you have a credit union account, you can apply for an emergency loan from a credit union. This type of lender is community-based. Moreover, they are friendly towards people with poor credit.
Credit unions usually offer emergency loans that vary in amount. However, most of them offer payday alternative loans. This can range from $200to $1,000. Furthermore, it is vital to note that credit unions only lend money to its members.
Online lenders don’t require you to become a member or be an account holder to qualify for an emergency loan. This type of lender usually offers a pre-qualification process. This can save your credit status from having negative impacts due to hard inquiries.
Taking out an emergency loan from an online lender can be easy. You can apply for it online. However, it is vital to check the credibility of the online lender before applying.
Unexpected expenses can be a hassle at times. Knowing what your options are in covering the cost can help you a lot. Furthermore, it would be best to choose a loan you can afford to save your financial situation from being further damaged in the long run.
Tiffany Wagner is a full-time writer that specializes in finance. In her free time, she likes to read books. Moreover, her favorite genre is classics.