As economic uncertainties around the world increase, more and more people are facing financial emergencies. Sometimes inevitable, these emergencies can leave you in a state of despair.
Fortunately, online lending offers a solution to financial emergencies. Nevertheless, it is essential to remember that the market for such loans is extremely vast, and finding the right one can be challenging.
From payday loans to title loans, there are a multitude of loan options that you can try out based on your needs and requirements. That’s why, to help you deal with financial emergencies effectively, we will walk you through 4 types of loans you can rely on.
Regardless of whether you are struggling with an emergency car repair or need to make ends meet until your next paycheck, these loans can help you out.
1. Payday Loans
Payday loans are often considered a reliable and quick solution to borrowing money. These loans can help you cover unexpected financial emergencies such as pet medical bills, car repairs, or urgent home repairs.
Unlike other types of loans, payday loans have more lenient credit checks, making them a very convenient option. The repayment term for such loans is very short, usually 2 weeks or by the time you get your next paycheck.
On the other hand, the loan application process for payday loans is generally swift and approvals happen within a few hours so you can easily manage your financial expenses. However, a common criterion with payday loans is that you need to have a stable income.
2. Credit Card Advances
A credit card can allow you to access funds through a credit card advance without much hassle. In this case, instead of borrowing money for purchases, you’ll use your card to borrow cash against your credit limit.
When compared to other forms of loan options, credit card advances offer lower interest rates. Since your cash advances are tied to your credit limit, it doesn’t require an additional credit check. However, it may require you to pay additional fees, usually between 3% and 5% of the purchase amount.
When it comes to credit card advances, transactions generally begin accruing interest almost immediately. That’s why it is critical to pay off your advances on time to save money in the long run.
3. Title Loans
Title loans, also known as car title loans or logbook loans, allow you to use your vehicle as collateral to secure a loan. In most cases, title loans are considered the last resource that allows you to get cash immediately without undergoing a hard credit check.
The loan process entails transferring the title of your vehicle to the lender or the financial institution in exchange for a lump sum of cash. The amount of money you borrow depends on how much your vehicle is worth. Typically the loan amount is about 25% to 35% of your vehicle’s value.
If you fail to repay the loan on time, the lender has the legal right to repossess your vehicle. That’s why it is extremely important that you repay your loan amount on time.
4. Personal Loans
Many banks, financial institutions and credit unions provide personal loans. These loans are one of the most commonly offered loans in the credit market and can be used for virtually any purpose you choose.
An advantageous feature of personal loans is that it allows you to repay a large sum of money over a longer period of time. Typically, the time period may be as short as one year or as long as seven years for qualified borrowers. Usually, such loans are borrowed for emergency pet medical bills, weddings or home improvement projects.
Just like every other loan, failure to repay a personal loan in time can affect your credit score and make it difficult for you to borrow in the future. This is why it can be important to carefully evaluate your options and choose a lender that can offer favorable terms and rates. Conducting through research and comparing different lenders can help you make an informed decision. Platforms such as Smarter Loans can help you in finding the best loan option for your needs. These platforms can often provide you with an overview of various lenders, their interest rates, and repayment terms, so that you can make informed decisions for your financial situation.
To Sum It Up
In times of financial distress, it is important to clearly understand the loan options available to you. Every loan that you get has its own set of pros and cons and the choice depends on your specific requirements and financial needs.
Regardless of which loan options you choose, ensure that you repay it on time to avoid a debt cycle. Ensure you adhere to the terms and conditions mentioned by your lender so you can prevent financial problems further down the line.
By making informed decisions, you can easily navigate financial difficulties safely. Make sure you thoroughly analyse your financial emergency and choose the most suitable loan for yourself.
