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Fast Financing Options for People Who Need for Emergency Situations

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When you suddenly face an emergency, every minute counts. Thus, it’s better to prepare for it in advance and create a clear action plan. However, each situation is unique, so there’s no one-stop solution. Additionally, it may be hard to struggle alone if you don’t have enough money in your savings account.

Even if an emergency has taken you by surprise, don’t worry. There are multiple options you can turn to, including those that provide online assistance and are available with bad credit. Below are some smart financial solutions for people who need money for emergency situations.

How to Get Money for Emergency Situations

Each of the options above can help you cover financial emergencies. Learn them all and choose the one that better suits your specific situation.

Apply for Emergency Loans

An emergency loan is a borrowing option designed to help people fix their urgent financial problems. Some emergency loans may have short repayment terms, while others come with an installment structure and are easier to manage. Here are some types of emergency loans.

Payday Loans

A payday loan is a small, high-interest debt that must be repaid in full by a borrower’s next paycheck. As payday loans don’t involve a hard credit check, they are usually fast and easy to access. You can get an emergency loan till payday in as little as one business day, even with bad credit. Most payday lenders offer their fast cash loans online, so you don’t need to leave your home to apply and get the money. Additionally, the application process is usually simple and involves no hassle or paperwork.

However, many experts don’t recommend using payday loans due to their high interest rates. As the funds must be repaid in just a few weeks, it increases the financial burden, making payday loans difficult to handle. This can result in loan prolongation that comes with additional costs. Thus, you may end up owing more in interest than the amount you have borrowed.

According to statistics, 4 out of 5 payday loans are rolled over. More than that, more than 80% of borrowers who renewed their loans are forced to go into another debt to repay the existing one. Therefore, loans till payday must be approached cautiously. We recommend using them only as a last resort, provided that you’re 100% sure you will be able to repay the money back on time.

Installment Loans

Installment loans are loans with higher amounts and, therefore, more flexible repayment terms. Unlike payday loans, they can be repaid in affordable monthly payments within 3 to 24 months. They also don’t require borrowers to undergo hard credit checks, allowing them to access emergency loan funds quickly. The amount ranges between $500 and $5,000 and will be calculated based on the applicant’s income.

An installment loan usually has a lower interest rate compared to short-term options. However, a longer repayment period makes it more expensive in the end. Thus, despite the apparent affordability, this way of borrowing money can come with a higher final cost.

Traditional Personal Loans

A traditional personal loan is a financing option offered by conventional financial institutions, such as banks and credit unions. It comes with repayment terms of up to 60 months and can provide you with amounts of up to $100,000, depending on your solvency. The main thing that sets personal loans apart from the options above is their favorable interest rates. An annual percentage rate on a personal loan typically ranges between 5.99% and 35.99%. 

However, you need to demonstrate a strong credit history to borrow money from traditional lenders. Additionally, personal loans come with more paperwork and longer verification due to a hard credit check performed. Therefore, it may take you up to a week to get the needed amount, which is not always applicable in emergency situations.

Home Equity Loans and Lines of Credit

A home equity loan is a secured loan that allows you to borrow money against the equity you already own in your house. This loan can be lifesaving if you need a high amount and have credit issues that hold you back from getting a regular personal loan. In most cases, you will be allowed to borrow up to 85% of the home’s value minus the mortgage amount you still owe. You will get a lump-sum deposit and can use the funds at your discretion. The repayment is made in equal monthly payments within 5 to 20 years.

A home equity line of credit (HELOC) is a mix of a home equity loan and a credit card. It allows you to access a revolving line of credit that you can use when needed and pay interest only on the amount you actually use. A HELOC usually has a draw period of 10 to 15 years. Within this period, you can use the funds and make only minimum payments. Then comes the repayment terms with both principal and interest repayment. This period can be up to 20 years.

Credit Union Loans

As credit unions are nonprofit organizations that are owned and controlled by their members, their loans typically have lower interest rates and more favorable terms compared to other options. However, there are a few things you need to keep in mind. First, you need to be a credit union member to qualify. Second, you still have to undergo a hard credit check before approval. Therefore, a credit union loan can affect your credit score.

Title Loans

A title loan is a short-term secured loan that allows you to borrow money against your car’s or RV’s estimated price. A lender uses your vehicle as collateral, but you can still use it within the whole loan lifetime. Typically, you can get up to 50% of your vehicle’s cost and repay the funds by your next paycheck. If you don’t repay the money, the lender can repossess your car or RV.

Get Fast Emergency Cash from Family/Friends

Borrowing money from relatives and friends is often an interest-free way to get extra cash for emergencies. Although many people consider it awkward to ask their loved ones for help, these options are still worth considering. However, you need to be responsible and repay the money on time to keep a good relationship with your family member or friend.

Consider Credit Card Cash Advances

Credit card cash advances are great emergency loan alternatives. They are one of the fastest ways to get cash for cardholders. You don’t need to fill out an application form or wait for lender approval. You can simply withdraw the needed amount from your available credit card balance in an issuer’s store or ATM.

However, there are some considerations that come with a credit card cash advance. First, this loan can be quite expensive. In most cases, the interest rate applied to a cash advance amount will be higher than the one set for regular purchases. Additionally, it will accrue from the moment you receive cash, with no promotional period provided.

Use a 0% APR Credit Card

A 0% APR credit card can help you save money on interest if used wisely. It comes with an interest-free promotional period, which can be between 6 and 21 months. If you manage to repay the funds within the set term, there will be no interest applied. However, you need to have good credit to qualify for this type of emergency assistance. Additionally, it may not work for you if your financial emergency requires you to have cash on hand.

Ways to Get Emergency Food Assistance

If you have no money to bring food to your table, don’t rush to get a loan. There are other options that can help you get nutritious meals without going into debt.

First, you can consider food banks. These non-profit organizations take food donations from restaurants and grocery stores and distribute them to food pantries and soup kitchens. These charitable organizations work directly with needy individuals and households. You can visit one and get free nutritious food, meals, and groceries to tide you over for a while. To find a food pantry near you, visit the Feeding America website and enter your ZIP code in the appropriate field.

Additionally, there are various government-backed programs that provide food assistance to needy people. To qualify for them, you typically need to meet certain poverty guidelines and belong to the eligible group. Here are some programs available:

  • Supplemental Nutrition Assistance Program (SNAP)
  • The Emergency Food Assistance Program (TEFAP)
  • Women, Infant & Children Program (WIC)
  • National School Lunch Program (NSLP)
  • The Child and Adult Care Food Program (CACFP)
  • Food Distribution Program on Indian Reservations (FDPIR)

Emergency Funding for Renters

If you struggle to pay rent, there are several options available. First, you need to contact your landlord and explain the situation to avoid eviction. Sometimes landlords can offer flexible repayment plans to help you repay the amount you already owe.

Additionally, eligible renters can apply for the Emergency Rental Assistance Program (ERA). This program provides government entities with funding in order to help low-income people cover the costs of rent and utilities. In some areas, you may also need to ask your landlord to apply for ERA first. To qualify for the program, at least one of your household members must be unemployed, lose income, owe large expenses, or have other financial hardships.

What’s Next?

The next step you should take is to realize that emergency expenses arise unexpectedly and can strike even the best of us. Forewarned is forearmed. Here are some ways to get prepared for future financial emergencies.

Create a Budget

When you have a well-thought-out budget and stick to it, it can give you the feeling that you have control over the situation. Even if unexpected expenses pop up, your nest egg will get you covered. This way, you will be able to overcome emergencies without taking out high-interest loans.

Start with listing your earnings and regular expenses to figure out where your money is going. Then, you can prioritize your expenses and determine some categories that you can cut off without changing your regular lifestyle much. The freed-up amount can then be put toward savings.

Build an Emergency Fund

The main step you need to take is to decide on your savings goals. Most experts recommend building an emergency fund that will be able to cover your regular living expenses for at least 3 to 6 months. Then, take a look at your budget and determine the amount you can set aside each month. 

Also, it’s recommended to keep the money for emergencies in a different account. You can create a separate savings account for emergencies and make regular replenishments from each paycheck. This will prevent you from spending the amount saved on nonemergencies. Additionally, you will earn interest on the amount you’re saving.

Improve Your Credit Score

Even if you try to foresee the unforeseen, you may still need to get an emergency loan at some point. This way, having an excellent credit score can help you get more favorable emergency loan terms. Keep in mind that the higher your credit score, the lower your loan cost will be. Additionally, you will be able to access higher loan amounts and longer repayment terms.

If your credit score is low, consider getting a credit builder loan or a secured credit card to improve it. Also, keep track of your payment history and try to always fulfill your financial obligations on time.

Bottom Line

Even if you face financial emergencies unprepared, don’t worry. There are various options designed to help you get back on track quickly. Besides emergency loans, you can access various non-profit and government-backed programs and avoid going into debt. Also, consider building emergency savings in order to face future life surprises well-armed.

Categories: Life