What are emergency loans?
In recent times, lots of people take loans to support business and unexpected emergencies. Emergency loans help for personal reasons while business loans are mainly for businesses. However, in this article, we will be talking about emergency loans. What are emergency loans? Emergency loans are personal loans used to cover unforeseen expenses. You can use the loans for emergencies like medical bills, funeral costs, or urgent loans. With emergency loans, you can have quick access to cash. Emergency loans can either be secured or secured loans. For secured loans, you need collateral to secure the loans. Unsecured loans do not require collateral and are issues based on your creditworthiness alone.
Furthermore, when going for emergency loans, always have it at the back of your mind that the loans are not created equal. They are different types of emergency loans and some have incredibly high rates and fees while some are low. However, borrowers with good and strong credits will score the lowest rate on emergency loans. Do you want to know more about an Emergency loan? Not to worry. Just follow this article to end. That is because this article contains everything you need to know about it.
What are the Types of Emergency Loans?
Just like I have stated above, there are different types of emergency loans. However, before taking out a loan understand the loan and how it works. And also learn the kind of fees you should expect. Nevertheless, below are the types of an emergency loan;
Personal loans
Personal loans are offered by credit unions, banks, and online lenders. They are known as installment loans, meaning that they are repay back over a set period of time. Personal loans are unsecured and are paid back over several years. Interest fees and rates depend on lenders but the rate depends on income, credit score, and debt. Disbursement times are from the same day that you apply to several business days.
Car title loans
The best option for people who want quick loans with bad credits is to take out a car title loan. Car title loans are short-term loans for small amounts with high-interest fees and rates. The loans use your vehicle as collateral. If you fail to pay the loan, you are in danger of losing your title and car.
Cash advances
If you own an existing credit card, the best way to get cash quickly is with a cash advance. With this step, you can use your credit card to take out cash through ATM or bank. You can repay the cash advance as part of a credit card payment
Payday loans
Need quick loans with bad credit? Payday loans are the best. Payday loans are short-term loans just like the car title loan. They are also for relatively small amounts with high-interest fees rate.
Payday Alternatives loans
If you are in need of an emergency loan and you want to avoid car title or payday loans, you can be able to qualify for a payday alternative loan. Payday alternatives are given by credit unions to their members to get funds quickly without going for payday loans.
Pawn shop loans
At a pawn shop, you can make use of valuable items as collateral to secure a loan. The pawn shop will give you money in exchange for the valuable item. If you repay the money before the due date you will get the item back. If you failed to, the pawn shop keeps it and sells it to get their money. The interest rates on pawnshop rates are low compared to other emergency loans.
How to choose emergency loans
When deciding on the type of emergency loan to go for, there are factors you must consider. You must consider the Annual percentage rate, fees, collateral, loan amount, the credit requirements, Time to fund, and repayment term. That is why it is very advisable to shop and compare lenders so as to get the lowest rates.
Steps to get Emergency loans
Now you want to apply for an emergency loan, let’s talk about the steps on how to get it. Below is the easy step by step processes to get an emergency loan;
- Check your credit and correct any errors before applying for the loan
- Determine the amount you can afford
- Pre qualify and compare offers from lenders
- Once you have gotten a loan offer with good and affordable payments, you can now gather you document and apply.
You can now get approval in a day or two days after the application. If you have a good credit score and your application is completed well, the loan will be approved.
