Introduction
No matter how much you try to stay prepared in life to face unexpected circumstances, you can never accurately predict the future. You are going to get into many difficult spots and may need urgent financial help. If you don’t have enough money saved and are looking for loans, emergency loans may come in handy for you.
If you are looking for easy approval loans, emergency loans may be worth considering. These loans are great if you don’t have enough money to cover unexpected expenses. But before you apply for an emergency loan, here’s everything that you should know about an emergency loan.
What’s an emergency loan?
These are unsecured loans, small loans that you can apply for on short notice to cover unexpected expenses like a medical bill or home repair. There are different kinds of emergency loans available, such as payday loans, cash advances, & credit cards.
What can you an emergency loan for?
Emergency loans are small amounts and unsecured, meant for urgent expenses. Typically, they are personal loans and have very few restrictions on how to spend the money, although some lenders may have a few restrictions. Generally, you can use emergency loans for expenses like car repair, hospital bills, and any other unexpected bills you may be facing.
Some lenders may block you from using the money on tuition and school, although you may be allowed to purchase textbooks and school supplies.
Top 6 factors to consider before you get an emergency loan
No matter which type of loan you are looking for, it’s better to thoroughly research them before you apply for one.
Credit score
Most lenders will check your credit score to determine whether to accept your emergency loan request or not. If you have a good credit score, chances are high that your request will get accepted. Some lenders may reject your application if your credit score is average or bad. However, there are many lenders who accept low credit scores, so don’t get discouraged.
Repayment time
Repayment time is the number of repayments you will have to do to repay the full loan amount. The payments can take anything between several months to a few years, depending on the loan amount & repayment amount. A longer repayment time will mean lower monthly payments but it also means you will end up paying more interest rates. If you can afford it, ask for a shorter repayment time to avoid paying too much interest rate.
Interest rates
The interest rates will overall determine the total cost of your loan. Hence, it’s important to negotiate for the lowest possible rates. If you have a bad credit score, you will probably be charged a higher interest rate. Though you can improve your credit score by making the repayments on time.
Budget
Analyze your finances and check if you can make the monthly payments on time. If you can’t, request for a longer repayment time to lower the monthly payments. Or you could also apply for a smaller loan, if possible, with smaller repayments that you can afford. Either way, make sure your repayments don’t stretch your monthly finances too thin.
Funding time
As you are looking for an emergency loan, you will obviously want the money to be transferred to you as soon as possible. Some online lenders transfer the money on the same day once the request has been approved while other may take a few days to transfer the funds. But traditional banks and unions will take longer to process the fund and transfer it to you.
Features
Sometimes lenders offer additional features on emergency loans such as free monthly credit score reports or free automatic monthly payments. Different lenders may offer different benefits, so make sure you ask around who offers the best features with their loans.
Conclusion
Emergency loans can help you face unexpected financial crises if you run low on money. Many lenders have flexible eligibility criteria for such loans, so be sure to shop around to find the best lender for you. We hope this helps you decide to get an emergency loan.
