If you don’t have a habit of keeping some part of your income aside as savings, then an emergency expense can cause you great trouble. In such situations, there are many options for getting an emergency loan. You can get the Best emergency loans through payday lenders, personal lenders, and credit card issuers.
While applying for the best emergency loans, there are many factors that you must consider in advance to help you in the long run.
Meaning of an emergency loan
The Best emergency loans are available in a variety of forms, such as credit card cash advances, payday loans, and personal loans.
Let’s discuss these different forms of emergency loans in detail:
Credit card cash advances
If you have an account, then getting credit card cash advances would be much easier for you. You just need to take your card to your bank branch or an ATM, enter your four-digit PIN, withdraw the amount you want, and use it for any purpose.
Before getting a cash advance, there are many things you need to keep in mind. At first, it is essential to note that the issuers of credit cards tack on cash advance fee, which further adds your cost by 5% or more on the transaction amount. In addition, there are not any repayment terms of credit cards, so if you don’t pay any attention, it might take several years to repay the loan amount.
Moreover, many people ignore the fact that cash advances assess high APR than any other advances. In addition to this, there is no grace period for the payment of the interest amount, which means your interest on the loan amount starts immediately after the loan is granted.
If you want a small amount, then applying for payday loans is the best option for you to choose. In this type of loan, only a smaller amount is issued, which is usually under $500, so if you want to buy anything in such a range, then a payday loan serves the best purpose. The payday loan can be applied online or in person, depending upon your choice.
Anyone can qualify for such types of loans, so its popularity has been increased over the past several years. As compared to personal loans, payday loans consist of fewer credit requirements. Moreover, some paydays lenders also don’t ask for a hard credit inquiry.
An exorbitant interest rate is charged in payday loans with an APR of approximately 400%.
It is essential to note that payday loans include a time period of two weeks for repayment of loan amount and to cover your emergency expenses.
A personal loan generally doesn’t come up with any restrictions. So you can freely use these funds when you lose your job, a car breaks down, or an appliance breaks.
The time period of a personal loan may vary from one year to several years. The major benefit of such a loan is that you can access more funds through a personal loan as compared to any other emergency loan.
If you want to apply for a personal loan, the approval for the loan can only be sanctioned based on your creditworthiness. The best part of personal loans is that you can get quick funding from such a source, while for other loans; you need to wait for a week to get your cash after the approval.
The interest rate of a personal loan depends on the amount of loan you have applied for.
Steps involved for getting an emergency loan
At the time of financial emergency, the first thing that came to our mind was to get money as quickly as possible. So, if you are planning to apply for the Best emergency loans, here are some steps for you to consider:
Check various alternatives
Before applying for a personal loan or credit card cash, it is essential to estimate the other options available to help you save some money. You can also seek help from your friend or relative instead of getting a loan from a bank.
If you want to get a personal loan, it is advisable to search for various personal lenders and compare the interest rate of these lenders. Then, choose the one where you think your money can be saved. Many websites allow you to know the interest rate charged by different lenders, so with the help of these websites, you can easily pick the best lender with a low interest rate.
Check your credit score
While applying for any loan, the lender first checks your credit scores. The credit score is that criteria depending on which your lender decides to provide you a loan. People with good credit ratings can easily get a loan, but if your credit rating is low, it might be challenging for you to search for a lender.
But now, a special kind of loan has been designed called bad credit loan for people having a low credit rating. In such type of loan, the lenders don’t give importance to your credit rating and provide you loan against any collateral security.
Moreover, it is easy to get such a loan, but the interest rate is generally high compared to any other loan. The risk of repayment of debt is high, so you need to pay a higher interest rate to get such a loan.
What is the reason for getting an emergency loan?
There might be any reason to get the Best emergency loans. Sometimes, you don’t have enough savings to bear your emergency expenses, so an emergency loan will help you get out of such a situation and reduce your stress.