Benefits of Using a Personal Loan During An Emergency

No one wants to be caught in an emergency guard. However, the essence of life needs you to wade through these hard moments, nevertheless. For example, with rising healthcare outlays and medical bills, owning an insurance plan alone is not the ultimate peace of mind. You may need cash in emergency medical situations.  

Similarly, savings can hardly get you through if you want to set up your small business or fund your child’s education in the UK, or the US. You would need cash at every step of these games. This is where financial tools such as personal loans come in handy. Such loans offer you access to critical funds with no expense limits, enabling you to fulfil your objectives that were until now thwarted by financial shortages.

Most importantly, a personal loan in an emergency may be useful in saving the life of a loved one or yourself, as well as freeing you from the guilt that you will have to suffer if anything bad occurs. Continue reading as we delve deeper into the benefits of using a personal loan during an emergency. 

Advantages of a Personal Loan in an Emergency

A personal loan might be a superb solution when you need fast access to finances in an emergency. Here are some advantages of a personal loan in an emergency:

1. Fast access to key funds

Given the rising demand for low-cost personal loans in recent years, it’s only logical that the variety of personal loan sources has increased as well. 

You’re in a better position than ever to make an informed choice about who your lender will be now that there aren’t any shortages of lenders. 

The best part is, the loan request procedure takes at most 24 hours (personal loan apps are way quicker). Once your loan request is granted and the sum approved, the cash will be sent directly into your bank account within an hour or two.

2. Easy to pay in EMIs

Another benefit of obtaining a personal loan is that the full repayment load is spread out over 1 to 5 years, depending on your bank. This is preferable to having to return the whole loan amount all at once. 

On the contrary, you may have to return the loan sum at once, if you borrow from friends or relatives. If you can pay for the entire amount before the deadline, asking for extra time will be of no use. Cheap personal loans relieve you of such burdens while providing you with just what you want—timely finances.

3. No collateral is needed

In contrast to a vehicle or a house loan, you do not need to offer collateral when asking for a personal loan. 

This is a major comfort for some of you who may demand a large sum to fund a large purchase but are concerned about not owning any assets (such as land or gold) that may be used as collateral against the loan. 

This concern about not having any assets is usually caused by the fear that you will be asked to give some kind of collateral. This isn’t the case with low-interest personal loans for emergencies.

4. Less paperwork

The paperwork for taking a personal loan in an emergency is less. This expedites the loan sanction process. They may even send someone to your place to assist with the papers if the bank provisions.

5. Reasonable interest rates

Personal loans feature low-interest rates making them accessible to all. This means that your EMI stays constant throughout the length of your loan. For this reason, there is no need to be worried about the volatile interest rates that define other types of loans.

Steps to Get an Emergency Personal Loan

While crises are difficult to deal with, getting a personal loan in an emergency does not have to be. To apply for a personal loan in an emergency, follow these four steps:

Compare lenders and shop around

To discover the best personal loan for your condition, compare as many banks as possible. Check not just interest rates but also repayment periods, lender fees, and qualifying standards.

Choose a loan of your choice

Pick the loan that best meets your needs after comparing lenders.

Complete the form

Once you’ve decided on a lender, you’ll need to fill out a complete form and provide any evidence needed, such as tax filings or pay stubs.

Obtain your cash

If you are accepted, the lender will also have you agree to the credit so that the cash may be given to you, normally by direct transfer. 

A personal loan normally takes around one week to finance, while some banks may fund loans as fast as the same day or the next working day following approval.

Picking the Best Lender for a Personal Loan in an Emergency

Here are a few things to think about as you assess your loan options:

Criteria for eligibility

While the criteria vary per lender, most require a strong credit score, verified income, and a low debt-to-income ratio. If you don’t meet these standards on your own, you may be able to get approval from a bank that gives poor credit loans or with the aid of a cosigner.

Rates of interest

Your rate of interest will play a key role in determining the total cost of your loan. The interest rate you are given is based on various factors, like your credit score and the repayment period you pick. In general, the higher your credit score, the better your loan interest rate will be.

Terms of repayment

Based on the lender, personal loan payback terms often vary from 1 to 7 years. While a longer term may result in a cheaper monthly payment, it is typically prudent to select the shortest period you can afford to keep your interest payments as low as possible. Also, many lenders give you higher rates if you choose shorter terms.

Funding time

If approved, you should get your loan in cash within one week. However, some lenders provide next- or same-day loans to eligible clients. 

Online lenders, on average, give quicker funding than credit unions or banks, which may be extremely useful when you want to pay for an unexpected need.

Online service availability

Online lenders often provide a speedier, more simplified approval and financing procedure than conventional lenders, making them a smart option for an emergency personal loan.

Key Takeaway

Personal loans are now the top option for you if you need to meet an unexpected financial demand due to their many perks. The fact that the loan is unprotected, repayable in EMIs, and readily available adds simplicity to the lending procedure. The range of personal loan firms has also grown in recent years.

If you want to know more about the benefits of personal loans in an emergency, visit Piramal Finance for related blogs and explore their products and services.