Life is unpredictable; no one knows when anyone can get into an accident or emergency and need cash immediately. Having access to an emergency fund can make all the difference. Fortunately, emergency loans are available to give you or your business quick financial help in those times of need. Banks, online lenders, credit unions, and financial companies offer emergency loans. Different types of emergency loans are available with them, varying in eligibility criteria, the period for repayment, interest rates, and the amount loaned. Here are six of the most common emergency loans available.
Table of Contents
1. Payday Loans
Payday loans are short-term unsecured but high-interest loans that are very easy to obtain. The amount available to borrow is low; up to a few hundred dollars. You should get a payday loan if you have a low credit score, can’t be eligible for other loans, or need a loan immediately since they fund you quickly. Make sure to opt for reputable lenders, like mycanadapayday.com, if you’re interested in getting a payday loan.
2. Personal Loans
Personal loans are unsecured loans that can be taken for emergencies and personal expenses. They usually have fixed terms for repayment and interest rates, and their repayment period can range up to six years, making them a viable choice. The amount you can borrow depends upon your creditworthiness, and you can usually get this cash quickly. However, note that if your credit score is low, you must pay a significant annual percentage rate (APR) on your personal loan.
3. Title Loans
In a title loan, you usually have to give an asset you own, such as a car, as collateral. You will temporarily surrender the title of that asset to the lender, and the loan amount you will receive is based on its appraised value. If you fail to repay the loan, you can lose your asset to the lender. Title loans get you access to cash fast, and you usually can qualify for it even if you don’t have a good credit score.
4. Cash Advances
Cash advances are short-term loans offered by credit card companies that allow you to withdraw cash from a branch of the bank or ATM to a specific limit. They usually have high-interest rates and might have additional fees, like a transaction fee ranging from 2 to 5% of the value of your purchase amount. These don’t require additional credit checks, but their interest rates are higher than your credit card variable APR. So the interest on the amount you borrowed will start to apply immediately.
5. Home Equity Line of Credit (HELOC)
This loan is based on the value of your home, so if you have collected enough equity on your home, you can get a home equity loan. The money you can borrow depends on the rate your house is valued at and how much you have left on your mortgage. Consequently, you can borrow up to thousands of dollars. It is a secured loan, requiring your house as the collateral.
The great thing about HELOCs is that they are long-term loans, so you’ll have a fixed interest rate with repayment plans up to decades. However, carelessness or misfortune can cause you to lose your house.
6. Payday Alternative Loans
These loans are offered by credit unions, and are typically more economical than regular payday loans because they have lower interest rates and a more flexible repayment plan. However, their downside is that you need to be a credit union member for at least a month before borrowing and need to meet other specific criteria like financial qualifications.
Endnote
Emergencies can arise anytime, and emergency loans are available to help you in times of need. If you have a low credit score, you can get a payday loan immediately, but the maximum amount you can borrow is low. Or you can get a payday loan alternative for less interest but need to be a credit union member to be eligible.
Personal loans have an extended repayment period, making it easy to pay back, but the amount you can borrow depends on your creditworthiness. Home Equity Line of Credit functions similarly, giving you a loan depending on your home’s value, and you can pay it back in up to decades.
If you own an asset you can lend, you can get a title loan in which you need to surrender the title of that asset until you pay back the loan. You can also get a loan from your credit card company, but these have high-interest rates. Make sure to research well and check if you’re eligible for the loan you want to borrow.
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