Emergency Loan: Get a Personal Loan for Urgent Needs

Quickly and easily pay unexpected costs like auto repairs or medical bills with an emergency loan, a short-term, low-cost unsecured loan. There are several emergency loans, including personal loans, credit card cash advances, and payday loans.

A short-term loan could be an option if you do not have the necessary funds. But before you apply, you should educate yourself on emergency loans and eligibility criteria and carefully consider your options. This article highlights everything you need to know about emergency loans.

What are the types of emergency loans?

A short-term loan used only for sudden expenses is known as an emergency loan. Here are a few types of loans that could be considered emergency loans:

1. Personal loans

A personal loan is an unsecured loan that provides you with a lump sum. You do not need to provide any security against the loan. Over the length of the repayment term, you will pay EMIs. Personal loans, in contrast to many other sorts of emergency loans, have tenure starting from 6 months to many years. A personal loan can be helpful in many different situations. You can use the money for any expense.

2. Credit cards

Credit cards are widely used for instant, direct payments. These are used to make purchases at stores. Credit cards are used to provide cash advances. That is, you pay with cash you do not have. Instead, you pay this borrowed amount at the end of a certain period (usually 30-45 days).

You will receive a statement at the end of 30-45 days that highlights all your expenses.

3. Cash advance loans

Cash advance emergency loans are short-term loans with a short payback period. The lenders of these loans are ready to work with people with low credit scores. In exchange, you have to provide security until you return the borrowed amount. Payday lenders provide quick cash advances. However, these have higher interest rates.

How do you get an emergency loan?

Before getting an emergency loan, decide what type of loan you need. You might want an emergency loan depending on your current expenses. Many lenders provide loans to borrowers with good and bad credit scores

Your credit history and the amount of money you want will determine the interest rates and other costs. Many times these loans are approved swiftly. Here’s how to get an emergency loan from a personal loan lender:

1. Submit the proper paperwork.

Submit the right paperwork with your application. You have to submit ID proof, bank statements, salary slips, and other documents. Keep the document in a file to make them easy to search.

2. Conduct a proper market study.

Before selecting a lender, check the lender’s credibility. Here are the things you should look at:

• Find out how the lender is perceived by reading testimonials from current and former borrowers.
• Understand their market position.
• Compare the interest rate given by this lender and that in the market.
• Understand whether they provide a flexible payback period.

3. Submit your application. 

For an emergency loan, the application is approved quickly. It can be given within 24-48 hours. Lenders quickly disburse money into your accounts.

Points to note before applying for an emergency loan

There is no single standard for payday and other emergency loans. It is necessary to make a choice only after analysing markets and lenders. Below are a few points to consider before opting for an emergency loan.

1. Your credibility will be checked.

Most lenders will look at your credit report. It will help them decide whether or not to offer you a short-term loan. Obtaining a loan will not be difficult if you have a high credit score. Do not worry too much if your credit score is poor. There are some lenders prepared to work with customers who have low scores. You can also offer collateral.

2. The payback period should be the focus.

The payback period is the time you get to repay an emergency loan. It could be a few months to 7 years. When the repayment period is more, EMIs will be lower, but the interest will be greater. Therefore, consider all options before selecting the payback period.

3. Select a feasible rate of interest.

When calculating the cost of your loan, the interest rate is the most crucial factor to consider. Most people want a low-interest-rate loan. You may be offered a high-interest-rate loan if your credit score is low. However, you can lower the interest rate by selecting a shorter tenure and smaller loan amount.

4. Consider the affordability of the loan.

Check whether you can afford the EMIs for the loan before signing the agreement. Evaluate your total income and expenses to see whether you can afford the EMI. If you think the EMI is too high, you can opt for a loan with a longer tenure. You might also opt for a loan of a lower amount that has smaller EMIs.

5. Consider the charges beforehand.

Emergency loans are also subject to charges. For example, you may be charged processing fees, prepayment charges, loan foreclosure fees and other charges. These may vary from 1% to 5% of the loan amount (or higher). Therefore, look through the additional charges section before signing the contract.

Conclusion

The term emergency loan refers to any loan that can cover sudden expenses. Emergency loans have flexible repayment periods, interest rates and charges. Therefore, you should always consider all terms of the emergency loan before agreeing.

Emergency loans are a type of personal loan with quick disbursal. You can reach out to an expert to understand more about emergency loans. For further details on emergency personal loans, visit Piramal Finance now.