Unexpected circumstances or emergencies require immediate funding. These could range from medical bills, rent and mortgage payments, utility bills, funeral expenses or home renovation, car repairs, etc.
Rohit Garg, Co-founder and CEO of SmartCoin, says, “For meeting any urgent expenses, availing emergency funds are one the best options as they supply the needed finance at the right moment.”
An emergency loan is essentially an unsecured personal loan that you can get for covering immediate and unforeseen expenses. These loans can range from small to medium with quick deposit service that allows approval within a day or two.
One can even get secured personal loans by placing assets as collateral for credit. Other options include low amount and high-interest payday loans, asset-based title loans, and credit card advances.
Garg says, “It is important to weigh in the various options as emergency loan requisites rates differ from lender to lender. These loans differ from the amount one can borrow, additional charges, and basic eligibility criteria like minimum credit score and income declaration.”
Industry experts say emergency loans cover a wide ambit of contingencies, however, it is also essential to evaluate the various terms and limitations that are associated with the leader before signing any loan application. While one can apply for such loans from one’s local credit-card issuer or payday lender, it is safer and better to get traditional unsecured personal loans from a bank, credit union or an online tender.
Additionally, experts say it is important for an individual to understand his/her financial needs first, before opting for a personal loan. Do not opt for more than you actually require, as, in the end, you only have to pay it off. Also, while choosing for an emergency loan it is important to consider various aspects such as the speed of funding, the rate of interest, terms of repayment, fee charges, and meeting credit score parameters.
Garg says, “Emergency loans are the next safest bet after friends and families when you are in dire need of cash. They are better than payday loans and title loans as they are more economical and easier to pay off. “
Also, try opting for a longer tenure while choosing the tenure for a loan. Experts say opting for a longer tenure loan, not only lowers the EMI for the borrower but also enhances his/her overall interest burden. Ideally, it is suggested to choose between 1-5 years or 12-60 months, other tenures may also be allowed by lenders but vary on a case by case basis.