You can plan your finances, prepare a solid budget and think you’re in control but let’s face it — life is everything but predictable. An unexpected event can toss your intensive planning of retirement funds, monthly budgets, investments, etc., out of the window. This is where emergency loans come into the picture.
You need to plan a sudden trip out of town or face a medical emergency out of the blue. You may require cash to repair your car after an accident or need to switch a job. These are a few of the many cases where different types of loans for emergencies may come in handy.
We have listed five types of emergency loans that you can consider taking should a situation arise. Read on.
Advance Credit Card Cash
We bet you weren’t aware that credit cards offer emergency cash. You can withdraw a certain amount from your credit card through an ATM (also referred to as card cash withdrawal). It can’t be any ATM; you need to visit your bank’s nearest ATM to avail of this facility.
The available credit limit depends on your card’s outstanding amount and your card type. It’s a good idea to know all features of your credit card in advance. You can get more information about your credit card in your net banking portal or by visiting the nearest branch. Either way, this is one option you must keep ready to tackle any emergency.
Payday loans are one of the most effective ways of dealing with a financial emergency. They are a short-term small amount of loans that can be availed of instantly. Create an account on sites like Blink Finance so that you can get an instant loan when required. Their application process is hassle-free, and the amount is quickly deposited in your bank account.
Payday loans need to be paid back when you receive your next paycheck (hence the name). They are best suited for salaried professionals because getting a salary is fixed, and they do not have good credit card scores. It would be unfair to take them to pay off big loans like house mortgages. They are meant for small expenses like electricity bills, credit card debts, organizing a birthday party, or buying a smartphone.
Home Equity Loan
When you take a secured loan with your home as collateral, it is called a home equity loan. Here is the general formula for taking a home equity loan:
The present market price of your property – the net outstanding amount obligatory to a home loan = The available sum you can obtain through the home equity loan.
The restitution amounts include principal and interest, similar to the usual home loan. As they are secure loans, you can easily qualify for one. Lenders usually don’t check the borrower’s credit scores before lending the amount.
Insurance Policy Loans
This type of loan is a savior for people who have a financial emergency but a poor credit score. It is secured, similar to home equity loans. Though, as the name suggests, you keep your insurance policies (money back plans or traditional endowment policies) as collateral to get the loan amount. Banks usually approve sums that range from eighty-five to ninety percent of the policy’s surrender amount.
Loans From Family & Friends
Your Family and Friends will always have your back during your tough times, and a financial crisis is no exception. Moreover, there is no documentation or legal formalities required. If you think the amount you require can be lent by your family members or friends, don’t give a second thought to call them up.
A financial emergency can hit you anytime. And not being prepared for it can hurt you in many ways. Don’t let that ugly situation trouble you. Take cues from this article and always be ready for the unexpected.