What is an Emergency Loan?
These emergency loans can be borrowed quickly to pay for unexpected costs like a car breakdown or home repairs. These loans are available to those in crisis situations who require money to cover unexpected expenses.
To cover unexpected expenses or to fill a gap in their income, borrowers can apply for an urgent loan. Because you don’t have the money and you need emergency cash immediately in critical situations, these types of loans can be transferred quickly. Many lenders offer fast turnaround times for loan disbursements, with some being available the next day. You can use emergency loans to pay unexpected medical bills, funeral expenses, or for time-sensitive repairs.
Not all emergency loans are created equal. Some loans have lower interest rates for applicants who have good credit scores, while others can offer very high interest rates. There are several types of emergency loans available, including personal loans, payday loans and credit card cash advances. It’s important to understand how these three common emergency loans work before you make a decision.
Types of emergency loans
A short-term loan for an emergency is a term that covers a variety of short-term loans. There are many types of emergency loans. Before you apply for one, make sure to fully understand the terms and conditions.
Personal Loans
Personal loans can be used as an emergency loan to provide you with cash. While most personal loans are not secured, some lenders offer secured loans that can be backed up by collateral. These loans can be offered by banks, credit unions and online lenders. Installment loans are also known for personal loans. They’re repayable over a set period of time.
Payday Loans
Payday loans are another type of installment loan that is used in emergency situations. They usually last for a few weeks or a month. Payday lenders are often marketed as an option for people with bad credit. These lenders will lend you money immediately and then ask you to repay them with your next paycheck. The Consumer Financial Protection Bureau states that the lender sets the interest rate and fee you pay. Some lenders can charge as much as 400%.
Cash advances for credit cards
A cash advance is a way to quickly get money for emergencies if you have a credit card. Many credit cards have a cash advance option that allows you to access cash at an ATM or bank. The cash advance is then rolled into your regular credit card payment.
How to get an Emergency Loan?
An emergency loan application can be similar to any other credit application. There are generally some steps that you should follow, but it will depend on the type of emergency loan and who you are applying to. This is how it works:
- Organize your documents: You will generally need certain documentation, such as your ID, Social Security Number, and proof that you have income or are employed.
- Compare lenders: Even if I need money now urgently, it is worth taking the time to compare rates from different lenders in order to find the best deal.
- You can check if you are prequalified (if applicable). Some online tools let you quickly and easily enter your information and pre qualify you for multiple loans. This makes it easier to apply for multiple loans and doesn’t require you to have multiple hits on your credit score.
- Apply now! Many lenders offer quick online applications that can be approved the same day as you submit your application.
Conclusion
People who require emergency cash are well served by instant loans. You can get it 24/7 with a very low interest rate.