Financial Emergencies: Borrowing Options When You’re in a Jam

Financial Emergencies: Borrowing Options When You’re in a Jam
August 11 12:51 2018 Print This Article

Have you been faced with an emergency situation that will cost a considerable amount of money to resolve? Has the transmission in the car given out? Did the refrigerator break? Septic tank causing household plumbing problems? Didn’t budget for that ambulance ride last week when you injured yourself? You can never be too sure when something could happen that causes you to dig deep into your budget and beyond.

The good news is that if your emergency is going to cost more than you have to spare right now, you could just borrow the money and pay it back later. Loans are convenient financial products that help to bridge the gap (and save the day) when you need cash but don’t have it up front. Before you get confused by all the information about loans out there, let’s start with the basics:

Loan Types

You have more than one option when it comes to borrowing money. Each loan type has its own purpose, so you’ll need to choose according to your needs.

  • Cash advance loans – you’ll likely find a lot of quick cash loans online to apply for. They range in amounts from $100-$1250 and can be used for any purpose.
  • Personal loans – banks and other private lenders offer personal loans. These too can be used for any purpose and generally are for $1,000-$10,000+.
  • Car title loans – if you own a car outright, you could use the title as collateral to apply for a car title loan. Depending on the type of car and its condition, you could get anywhere from $100 – $1,000+.
  • Home equity loans – if you need a large sum of cash for a home repair home equity loans are an option. The amount you receive will be based on the amount of equity in your home and the percentage lenders will loan you.

Which Loan is Best?

So, you know what types of loans are out there to help you out of a jam, but which loan is actually going to work best for your situation? Here are a few factors to help you make that decision:

Needs – what do you need the loan for. As you can see, some loan types can only be used to resolve specific matters.

Convenience – when you’re dealing with a financial emergency the last thing you need is to be inconvenienced further. If you don’t have time to visit a bank or lender, you’d want to opt for a loan such as a cash advance which can all be done online.

Application process – some lenders are going to make you jump through hoops to get approved. This means filling out a long application as well as providing a wealth of information to back everything up. If you don’t have time for long forms and tons of paperwork, again a short-term cash advance would work better than a traditional loan or car title loan in which you’d be required to schedule a visit, fill out paperwork, and wait for approval.

Eligibility requirements – every lender has their own set of eligibility requirements for borrowers to consider. To get approved for a banking personal loan, for instance, will require you to have great credit, tax returns, pay stubs, bank statements, and in some cases, collateral. Short-term lenders, on the other hand only require you be 18, have identification, a valid checking account, and proof of income.

Access to cash – you’re trying to handle an emergency which means you don’t want to wait 7-10 business days to receive those funds. While traditional loans may take longer, online installment loans are generally approved in seconds with accounts being funded the next business day.

Being in a financial jam does not mean that you should jump into a contract with a lender without first exploring your options. There are a lot of loans out there and each has its own benefits. As you can see from the information above, a bank loan may be ideal for issues that can hold off a few days while short-term loans online are a better option when you need to handle things right away or simply don’t want to jump through a bunch of hoops. Based on your financial status, need for cash, and purpose for the loan, you can make a wiser decision on which is best for you.

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