Emergencies happen to anyone at any time, and occasionally financial support is required to sort out these emergencies. For instance, unexpected medical bills, accidents or car repair. Under these circumstances, an emergency loan comes in handy.
Emergency loans can be a savior in an expected emergency. However, it is tricky to find emergency loans with affordable interest rates. Some of these loans have extremely high rates of interest. So they end up doing more harm than good to the borrower.
Thus, when faced with financial problems, it is essential to consider the best alternative to the emergency loan available. Moreover, you should not borrow more than what is required to fix your immediate financial problem.
Emergency loans are tailored to suit different elements. There are those emergency loans made specifically for unemployed persons or retirees. Additionally, there are emergency loans that target charities and philanthropic foundations specifically.
Emergency loans from non-profit institutions are often available to anybody regardless of his or her creditworthiness. As such, if you need a loan of urgency, and you have a bad default record, you could try a non-profit lender.
Emergency loan options
There are several options available if one is in need of an emergency loan. For example, one can get support from friends and relatives or seek a bank or a credit union loan. Additionally, if you have a better credit, it is advisable to take a personal loan that has low-interest rates.
Simple, quick tips to consider before taking an emergency loan
- Take into considerations the terms of other alternatives.
- Choose the right firm
- Never borrow more than what you need
- Ensure that you can afford to repay the loan
- Make use of the loan for the particular purpose you intended
- Get familiar with the interest rates
Various countries have put in place different procedures to ensure borrowers repay their loans as soon as possible. In such cases, before they lend out the loans they often ask for collaterals. Collaterals are items submitted by the borrower to serve as security for the loans. An example of a secured loan is a car title loan.
Borrowers who want to get emergency loans must surrender the hard copy of their car title to the lender, in exchange for a loan amount. It is from these transactions the term car title loan emerges. It is only when the loan is repaid in full that the borrower gets back his/her car title.
However, if the borrower defaults to make repayments, the lender is at liberty to repossess the vehicle and auction it to repay the borrower’s unpaid debt.
Car title loans are short term. Subsequently, they tend to have higher rates of interest in comparison to other loans.
Most secured loans’ lenders do not need credit checks to approve a borrower’s application. They only consider the condition and the value of the car that is given out as collateral.
Benefits of Emergency Loans
- Convenience: Once the borrower applies for a loan of urgency, he or she gets the cash within minutes.
- Ease to access: Emergency loans do not require credit checks hence available to any individual above 18 years who has a valid ID and a regular source of income.
- Relatively high-interest rate: Emergency loans usually have higher interest rates as compared to other loans.
- Emergency loans have repayment penalties: These sanctions are meant to punish borrowers who cannot make repayments within the scheduled time.
- Emergency loans have an exit fee: Some lenders usually charge exit fees when the borrower makes the last payment.
Emergency loans are meant to cater for unforeseen and unavoidable emergencies. However, it is important for one to go for an emergency loan when there is totally no other alternative.
It is also essential to build good credit checks so that you broaden your options to other available credit products that attract low interest rates. These options will bridge the need for emergency loans.