Emergency Loan: When to take it and is it worth It?
Financial hardships that come with losing a job, bill payments, medical emergencies and other living expenses can occur when they are least expected. Securing an emergency loan in such cases can be the ultimate solution. If you are a middle-income earner, chances are that you pay for your expenses and the rest of the salary is channeled into your bank account. Apart from fees payment, house rental and car expenses, you also may have allocated some money to cater for miscellaneous expenses. However, when unplanned situations that need you to spend extra money hit, you will find yourself in a financial crisis.
While savings can help cater for emergency expenses, more money may be required to clear the remaining balance. In this case, taking out an unsecured loan can relieve you of the stress. Compared to bank credits, the loans are very easy to apply since the process is very fast. An emergency loan can be used for car repairs, weddings, business costs, refinancing credit card balances, etc. The internet has a variety of options from online lenders who offer emergency loans. One common characteristic of emergency loans is that their interest rates are relatively higher since the loan is transferred into a borrower’s account within a very short period. Borrowers with a poor credit score can also apply for the loan.
Have an emergency? How to apply for a short-term loan
Depending on your needs, emergency loan can be applied both online and in-store. For online applications, there are often no documents required and the money will be transferred into your bank account within a few hours. If you choose the in-store option for the loan, ensure that you select a lender whose store network is convenient to your location. Lenders who offer the loans online will require you to give details of your bank account where direct deposits are authorized. After loan approval, the money will be directly transferred to your account.
Features of emergency loans
Short-term emergency loans come in handy when you are faced with emergency financial situations. It is also important that you compare your options before starting out with the application. Here are some of the most important features to look for in emergency loans
If you need cash to cater for an emergency situation, the quicker the funds are approved, the better. Some payday loan lenders offer borrowers with same-day funding, including weekends. But there are lenders who will require you to wait for up to 2 or 3 three business day for the funds to be approved.
Maximum loan amount
With payday loans, there are state regulations which restrict the amount of money that can be borrowed with emergency loans, but this does not prevent direct lenders from lending more. There are emergency cash lenders who will require borrowers to work up a tiered system for them to qualify for the required amount.
The annual percentage rate charged by lenders is also regulated by the state. Interest rates vary among lenders who operate in the same state.
Benefits of emergency loans
Quick access to funds
Emergency loan providers do not follow the same process as traditional banks when approving the loan, making the whole process much faster and convenient. When applying in-store, the funds can take as little as an hour to be approved. In online application, the money will be approved either on the same day or by the next business day.
Money can be used for any purpose
Lenders do not place restrictions on how payday loans should be used, as long as the money is used for legitimate or productive purposes.
Borrowers can choose from a big pool of lenders, both online and in-store.
No collateral required
These loans are unsecured, which means that no asset is needed as guarantee for payment.
No credit check
Borrowers with bad credit are also allowed to apply for emergency loans. However, you have to demonstrate your ability to repay the loan.
Is there anything to consider before applying?
Even before starting your emergency loan application, it is important to ensure that you won’t have any difficulties repaying the loan. If you think you may have challenges, you need to seriously reconsider whether to take out the loan or not. Making late payments means that you will have to incur additional fees, which can eventually affect your credit score.
It is also advisable that you take some time to go through the term and conditions before applying for a payday loan. This will give you a clue on how much you will incur on the fees and additional charges. You actually can’t tell when you need to take out an emergency loan, but before applying, here are some important factors to consider.
Is it a genuine emergency?
The first factor to consider is whether the circumstance really requires you to take out the loan. There are some situations that can wait till the end of the month.
For you to be eligible for the loan, you must meet the minimum age required by your state – be a permanent resident with a steady income source.
How will you repay the loan? This depends on the loan lender and the borrower obtained the loan. For in-store application, you may be required to provide a post-dated check. If you consider an online application, you have to provide your bank account details for deduction purposes. You can also repay your loan before the agreed upon time by using credit cards, debit cards or money orders.
Have you found the best deal?
Emergency loans can come in handy when you are caught up in emergency situations, but this does not mean you have to close the deal with the first lender who offers you the loan. You first need to go through the reviews of your lender. Were past customers satisfied with the services offered?
Taking out an emergency loan is a great thing, but only when the funds are used correctly. On the other hand, they can be a nightmare when you do not take time to go through the terms and conditions of the loan. Instant loans are especially important when you need short-term funding for a given time period. With emergency funds, you will enjoy the high approval rate and no credit check, but you should also take note of the short repayment term and high interest rate incurred. This will prevent you from getting into more trouble than you initially had before taking the loan.
My Name is Jay has and I have a passion for financial writing. I am the chief writer on this blog. I do my best to verify all the information but if there is anything amiss please let me know and I will do my best to correct it.