Emergency loans are loans anyone can get to rapidly pay for unexpected expenses. These refer to money disbursed quickly for an urgent purpose. Emergency loans are meant for expenses that you cannot plan to pay at another time.
They are required for urgent needs if you need money quickly to settle any urgent need. If you do not have enough funds for an emergency day, it is best you consider going for an emergency loan.
Emergency loans help to cover unplanned expenses that may include your car or your house repairs. Know that emergency loans can be secured or unsecured.
Unsecured loans are very available and they can be gotten from banks, credit unions, or an online lender. Emergency loans are not equal; some come with a lower interest rate, while others have a higher interest rate.
Types of Emergency Loans
There are different types of emergency loans. But before taking any loan you need to know the different types of loans. How they work and the fees you are to expect.
1. Personal Loans
This kind of loan is offered by financial institutions, such as banks, credit unions, and online lenders. Personal loans are installment loans; they are paid back with interest over some time.
These institutions give you a large sum of money and you must pay it back monthly. It also comes with interest and fees. This kind of loan gives you the privilege of paying a large sum of money over a long period.
2. Payday Loans
This type of loan is an instant loan that allows you to borrow a small amount of money. The period for repayment of this type of loan is very short, and its interest rate is high.
This kind of loan is best for people that need a very small at of money and can repay the whole money in a short time.
3. Car Title Loans
This type of loan is a secured loan that uses your vehicle title as collateral. If you are unable to pay back the loan, the lender will have possession of your car. It is a type of loan for those with a bad credit card.
4. Cash Advances
Cash advance helps you to get funds quickly if you have a credit card. You can use your credit card to receive cash from the ATM or your bank. You can repay the cash advance as part of your credit card payment.
5. Payday Alternative Loans
Payday alternative loans are given by some credit unions. It gives its members an option to get money without turning to payday loans.
How to get an Emergency Loan
Before getting an emergency loan, you need to decide the type of loan you need. To get emergency loans, you need to first;
- Arrange your documents. They include your SSN, proof of income, and employment.
- Then you compare lenders, their rates, and terms. Then you choose the lender you want to work with.
- Next, you fill out your application and wait for the approval.
These are the steps to get an emergency loan.
Where to get Emergency Loans from?
If you try to get an emergency loan from your friends or family member and it seems futile, you can then try to get loans from lending platforms.
It is possible to secure emergency loans from banks. But be aware that most banks will give loans to people with a good financial record. So, having a bad credit history, your loan request is possibly going to get rejected.
The loan processing method of banks is different compared to that of other lenders. They require a higher credit score or income requirements before you qualify for a loan.
2. Credit Unions
These lending platforms have friendlier loan terms than banks. It is possible to get a loan from a credit union even if you have a poor or fair credit score. But the loan you can get from this platform is usually small.
Some credit unions only loan funds to those persons who have been their members for some time. So, if you do not meet their membership requirement, you may not be able to get an emergency loan from the credit union.
3. Online Lenders
Online lender offers a wide range of emergency loans and they do not require you to be a member before giving you emergency loans.
Some online lenders offer only personal loans while others offer short and long-term loans. But securing a loan from an online lender depends on the lender’s requirements.
What can you use Emergency loans for?
There are a lot of things you can use an emergency loan for.
- Medical bills.
- Rent and mortgage payments.
- Funeral expenses.
- Home/car repairs.
These and a lot more are what you can do with an emergency loan.