How to get an emergency loan and what they are
If you’ve ever been faced with a large medical bill, an unexpected car repair, or any other emergency, you know that it can be difficult to quickly raise cash. Although an emergency fund is an excellent financial tool, the majority of Americans don’t even have enough money to cover an emergency. If you don’t have enough money, you can get emergency loans to cover your big expenses.
What are emergency loans?
Emergency loans are offered to people when they have unexpected financial expenses. The amount you borrow will depend on the cost of your emergency. However, they are typically between $250 to $1,000. These loans can usually be funded quickly. Deposits are typically available within a few days after you have been approved. Some lenders are able to fund loans within 24 hours of your application.
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Generally, emergency loans can be obtained without collateral because they are unsecured. But, there are lenders that offer secured personal loans. These loans require borrowers with assets to secure the loan. While you have the option of getting emergency loans through credit card advances or payday loans, we recommend not doing so.
Personal loan standards can vary from lender to lender so you should evaluate each one individually. Compare the amount you can borrow, fees, credit scores, income requirements and monthly payments when comparing lenders.
What is an Emergency Loan Used For?
As a type of personal loan, you can use an emergency loan for almost anything, like:
- Medical bills. An emergency loan can help you cover the costs of unexpected medical expenses, or if you have been to the emergency department.
- Rent and mortgage payments. If you can’t pay your home payments on time, but you are short of cash, an emergency loan may be the best option.
- Utilities. To pay your utility bills on-time, keep the lights on. Being on top of your bills will ensure that you aren’t behind in expenses, and it will reduce the risk of having your credit score drop.
- Funeral expenses. If your loved one died without a plan for funeral costs and other end-of life expenses, you might need an emergency loan.
- Home and car repairs. Although you might find a better rate and term with a Home Equity Line of Credit (HELOC),Home Equity Loan Some home repairs are urgent and require payment. Auto repairs tend to happen at the worst possible times. You can also get an emergency loan to cover costs such as home repair or car repairs.
Some personal loan lenders place restrictions on the use of emergency loans. They may not be available to help pay for higher education costs. Before you submit a request, read through the terms of any lender.
Types Of Emergency Loans
A variety of emergency loans are available, including:
- Personal loans. An unsecured personal mortgage can be obtained. It uses your credit score, history, and other factors to determine your eligibility, the interest rate, and the amount that you can borrow. There are also secured personal loans available from lenders. These personal loans can be collateralized with assets like real estate, investments, cars and other personal property.
- Payday loans. Payday loans are high-interest, low-amount loans. Although they don’t require a credit review, payday loans can often be paid back within a few days. These loans can range from $500 to $400% and are typically less than $500. This option should be avoided if at all possible.
- Title loans. When you surrender the title of your vehicle (like your car) to your lender for cash, a title loan is what you do. Your lender will keep your vehicle even if you don’t pay the loan back.
- Credit card advances. With a credit card you can borrow cash using your existing credit balance. Cash advances on credit cards are subject to higher interest rates than regular purchases. Additionally, you may be charged fees for transactions and processing fees. When you withdraw money, interest starts to accrue and there is no grace period. This will lead to a higher amount of interest that you must repay.
Where can I get an emergency loan?
An emergency loan can be obtained from your creditor or payday loan lender. However, it is best to get a traditional unsecured personal loans from a bank credit union or online lender.
You might be eligible for a personal loan through a traditional brick-and mortar bank account.
Banks may have different processing procedures than other lenders. Many banks have higher income and credit requirements than other lenders before you can get a personal loan. The money may not arrive as fast as you need. Check how long it takes for the funds to reach your account before you apply.
An emergency loan can be obtained from a credit cooperative if you have a card with a credit union instead of a banking account. Credit unions have a community focus and are more accommodating to those with poor and fair credit.
Credit union emergency loans vary in amount, but many offer payday alternative loans between $200 and $1,000. You should remember that some credit unions will only lend to current members or people who have been members for at least a certain time. Other options may be available if you do not meet the requirements, or you have to borrow more.
Online lenders offer many types of emergency loans. Many don’t require that you are a current member or account holder. Pre-qualification is available for many online lenders so you can check your eligibility to borrow an urgent loan. This can help you avoid negative credit checks that could negatively impact your credit.
Even though you might be uncomfortable with an online lender offering personal loans, traditional banks often offer online application and processing. You should make sure the online lender you choose is trusted and trustworthy with a secure website.
How to Choose An Emergency Loan
Avoid picking the first of many emergency loan lenders when you search. Take these things into account when looking for the best lender.
- Financing time. How fast can you transfer your money to your account The ideal time is within one to two working days. Some lenders can take upto a week to deposit funds. Others can do it within one or two days.
- Rates of interest. Even though having great credit can help you get the lowest interest rates, it’s worth looking at what lenders charge for those with less-than-stellar credits. Compare lenders to compare the costs of each lender, based on credit scores.
- Repayment terms. Are you looking to make lower monthly payments, pay off your loans sooner, and make more? Or are you more comfortable making smaller payments over a long term? While emergency loan terms may vary depending on the lender, many require that a minimum dollar amount must be repaid each payment. For example, if your loan amount is $500, you may only be able to repay it in a few months.
- Fees. To find out the exact fees charged by each lender, read the fine print. Common charges for an emergency loan include origination fees, late payment penalties, and late payment penalties.
- Credit score requirements. For most lenders, you will need to meet a certain credit score threshold in order to be approved for a loan. Your credit score has an impact on how much you can borrow and what interest rate it will pay.
Every lender has their own requirements and standards. Make sure to read all of the information before applying for an urgent loan.
You have other options than a loan for emergencies
You don’t have to take out emergency loans if you want to borrow cash quickly. Consider these alternatives, depending on the purpose of your emergency loan before applying for one:
- Consolidating high rate credit cards. Think about a consolidation loan Or, Transfer credit card for balances up to 0%.
- Covering home repair expenses. Get the most out of your home equity with a HELOC, or loan. These loans can be secured by using your home as collateral. HELOCs are more affordable than unsecured loans. The repayment terms are longer and the interest rates tend to be lower than for unsecured loans.
- How to pay off a medical invoice. Talk to your doctor about a payment plan. There are interest-free payment plans available that will allow you to make monthly installments that work for your budget. Settlement options are available if you’re in serious financial difficulties. A few hospitals will accept a payment upfront to settle the bill. The hospital is getting paid immediately.
Consider reaching out to your family and friends if you’re truly in dire need of money. You may also be able to get financial assistance from nonprofits based on your specific needs.
Borrowing money may not be easy. You should explore all options before turning to emergency loans. If you have no other options, emergency loan are an affordable alternative to credit cards, payday loans and title loans. Compare all your options to determine which is the best option for your needs.