Life is unpredictable. Often the surprises are good, but now and then, an unpleasant surprise that requires extra cash to cover comes your way. There are many circumstances that make emergency loans necessary. A dental problem is a common and expensive reason that people need emergency money. When you’re suffering from a dental issue, it’s hard to ignore it and put it off. Home and car repairs are two other reasons that a person may need cash fast.
Ideally, you’ve got an emergency fund built up. But if you don’t, you will need an emergency cash loan. This article will guide you through what are emergency loans, how emergency loans work and the different types of emergency loans you can use to access cash fast when unforeseen disaster strikes.
What are emergency loans?
Emergency loans are alternative loan products that recognize that you need money as fast and as painlessly as possible. Emergency loans are set up to get you through the entire process, from application to money in your hands, as quickly as one hour from start to finish.
How emergency loans work
Depending on the type of emergency loan you use, you may borrow money by putting an item down as collateral or not. Secured emergency loans where you offer an item as collateral are often more flexible and less expensive because the lender takes on less risk. In either type of emergency loan, the lender does not require a credit check or a borrower with a good credit history, which is good news for a borrower with a troubled financial past.
Emergency loans are often short term loans designed to be paid off quickly. Depending on the type of emergency loan, some must be paid off using the next paycheck while others (often secured types of emergency loans) will allow you to repay them over the course of a year or more. Regardless of the different types of emergency loans you use, never borrow more than you need and try to repay the loan back as quickly as possible. This will keep fees and interest down to a minimum.
Different types of emergency loans
While there are several ways to obtain cash when you need it, different types of emergency loans options have their own requirements and limitations. There are six different types of emergency loans available to you:
1. Car title loans
Nearly anyone who owns a car outright with a clear title can get a car title loan. Car title loans are considered secure loans because the borrower offers the lender the car’s title as collateral. These loans are quite popular since they are easy to get, provide fast cash and are more flexible than other types of emergency loans. The application process takes a few minutes and is often available online 24/7.
Car title loans allow borrowers to continue driving the car while they pay the loan back. The loan payback period can be longer and more flexible. Considering that these loans can be funded within 24 hours of applying, this loan option is a no brainer for borrowers in need of some emergency funds who can qualify.
2. Car registration loans
Similar to a car title loan but designed for car owners who do not have their title yet. The reason that car owners may not have their title is that they still owe money in the form of car payments on their car. Car owners that own their car but are still paying it off can be approved for this type of emergency loan. Because this loan in not secured by the title or pink slip, it must be paid back sooner than a title loan.
3. Credit card cash advance
Many credit cards allow for cash advances. Using a credit card’s cash advance feature is a proven way to get an emergency cash loan fast. The downside is that you must have a credit card with this feature and have enough credit available on the card. With this type of emergency loan a borrower must be motivated to pay off the balance quickly since credit card cash advances are expensive and come with additional fees that credit card charges don’t.
4. Payday loans
A payday loan is a cash advance on your future paycheck. This type of emergency loan is a good option when you need money fast. But you must be mindful of how much you are borrowing. Because the amount will be due with your next paycheck. A borrower must be sure they can afford to pay this emergency loan back out of their next paycheck without getting themselves in further financial trouble.
5. Home equity loans
A home equity loan is a good, emergency cash source for homeowners. This method is harder to qualify for and takes longer than a car title loan or a credit card cash advance to get.
The interest rates are better but the trade off is that they take longer to get and require good credit and lots of paperwork.
6. Pawn loans
Pawn shops will loan you cash in exchange for items to be left as collateral that they consider valuable. For small amounts of cash fast, pawn shops are a useful option. Once the loan is paid back, your item is returned to you.
The drawbacks to pawn loans is the limited amounts of items you can pawn. Pawn shops are normally interested in jewelry, tools and electronics. Also, a pawn shop may not offer you a cash amount worthy of the value of the item you’re borrowing on.
Now that you know how emergency loans work and know about the different types of emergency loans, you have options next time you need some emergency cash. Some of these options are better than others depending on the borrower and the situation. Save this article for yourself and share it with friends and loved ones. Next time an emergency comes up that requires you to find the cash you need quickly, you can review the options to make an informed decision of what emergency loan option will work best for you.