We all know that old cliche: life comes at you fast. It sure is true. Life is full of unexpected twists and turns, and even the most prepared of us can be caught off guard. Unfortunately, many of life’s surprises can be quite expensive, like an unexpected home repair, legal expense, or car trouble. When you simply don’t have enough in the bank account to pay for the unexpected, what is there to do?
For some, the answer to this dilemma is an emergency loan. Read on to learn all about emergency loans, the different types of emergency loans ava ilable, and to help decide if an emergency loan is right for you. Or, payday loans in Erwin use the links below to jump ahead to a section of your choosing.
What is an emergency loan?
An emergency loan is a type of loan that can be taken out on extremely short notice. Aptly named, an emergency loan is typically taken out in the event of an unexpected and pressing expense, such as a hospital bill from a sudden illness, auto repairs from a car accident, or to cover funeral expenses for an unexpected passing.
The short answer is yes-most people with poor credit can qualify for an emergency loan. However, getting an emergency loan with poor credit can come at a cost. Some types of lenders raise interest rates significantly when lending to those with bad credit.
Different types of emergency loans
There are various types of emergency loans available, the most common of which are personal loans, credit card cash advances, or payday loans. Let’s review the pros and cons of these common emergency loans.
A personal loan is a flexible loan from which the fund can be used for a variety of different purposes, including to pay for an emergency cost. When you take out a personal loan, you’ll agree to a set loan amount, which you’ll receive upfront. You’ll also agree upon an interest rate and repayment terms. Your repayment will take place in fixed-amount installments over the course of a predetermined period of time, typically up to 7 years, until the loan amount plus interest are repaid.
There are a number of upsides to personal loans. First, a personal loan can give you the opportunity to get the most cash of all emergency loans. Next, a personal loan is what’s known as an unsecured loan. This means that you don’t need to give any collateral in exchange for the loan, such as home equity or a savings account. Additionally, while personal loans can come with a range of interest rates, these tend to be lower than credit card interest rates. Average APRs for borrowers with strong credit can be as low as 4%. A personal loan that is paid on time over the course of the loan terms can result in positive credit, improving your overall credit score.
On the downside, because a personal loan must go through an approval process, it can sometimes take a few days for the cash from a personal loan to become available. Additionally, the terms of a personal loan can be very dependent upon your existing credit, sometimes making it a poor choice for those with poor credit. APRs can reach up to 36% for borrowers with bad credit.
Credit card cash advances
Did you know that you may be able to use your credit card to unlock cash? Just like with a debit card, you can get cash from an ATM or the bank using your credit card. This is what’s known as a credit card cash advance.