Depending on your needs, credit score and loan amount, you may consider Payday Loans, Title Loans or Personal Loans.
According to recent surveys, more than 50% of Americans do not have enough money to meet their emergency needs. What's more, a quarter of Americans say they don't have any savings at all in case of unforeseen life situations. Thus, when these people are faced with unexpected expenses such as debt consolidation, car or home repairs, urgent purchases, utility bills, and more, they are in search of urgent financing.
One of the best and most suitable options for such a situation is an Emergency Loan, as it is designed to help borrowers cover their needs. There are currently several types of Emergency Advance Payday Loans, but each of them is characterized by short-term repayment periods and high interest rates. In this article, you can get more detailed information about what an Emergency Loan is, what are its types, how to get approved, and more.
What Is An Emergency Loan?
In fact, it is quite difficult to give a specific definition of what an Emergency Loan is. As a rule, emergency loans mean a small loan that is repaid over a short period of time. It was created so that any borrower in a difficult life situation could apply and receive financing for their needs.
A distinctive feature of the Emergency Loan is its availability. Often, a lender has only minimal eligibility criteria, allowing virtually any borrower to complete an application and be approved. Moreover, emergency lenders work with different types of credit, so a bad or poor credit history will not prevent a borrower from getting money for their needs.
Why Do People Need Emergency Loans?
As a rule, this loan is offered to people with bad or poor credit history, as people with good credit may qualify for better loan offers. However, the fact that emergency lenders operate with bad credit and have minimal eligibility criteria means that they often charge extremely high interest rates.
Experts say that before applying for an Emergency Loan, you should explore less expensive alternatives. However, why do people need Emergency Loans and when would this option be a good option?
If a borrower finds himself in a difficult life situation, and he cannot get help from relatives or friends, an Emergency Loan can be his salvation. Most often, people apply for an Emergency Loan to cover the following needs:
- Car repairs needed to go to work.
- Paying utility bills or renting an apartment
- Urgent medical treatment
- Unforeseen purchase
What Are The Main Types Of Emergency Loans?
As already mentioned, an Emergency Loan does not have a specific definition, so here are several options that can help the borrower cope with unforeseen needs:
1. Payday Loan.
This loan is one of the most popular types of emergency financing in America. Most often, lenders provide between same day $100 loan and $1,000 so that the borrower can cover emergency needs. This loan is short-term, so the debt must be repaid on the next payday of the borrower (often within 14-21 days). If a borrower meets the minimum eligibility criteria and has researched state laws in advance, their funding application can be approved almost instantly. A Payday Loan is easy enough to get even with a bad or poor credit history, but it has its drawbacks. Most often, borrowers will be required to pay between $15 and $30 for every $100 borrowed.
2. Title Loan.
If the borrower owns the title of the car in his own name, he is eligible to apply for a Title Loan. It also has a minimum number of eligibility criteria, however this loan is secured by the title of the borrower's car. As a rule, the borrower can receive from 25% to 50% of the value of his car. Using a car as collateral helps the borrower avoid high interest rates and unfavorable loan terms. However, it is important to note that in the event of missed or late payments, the borrower risks losing their vehicle.
3. Personal Loan.
This loan is unsecured and allows the borrower to apply for funding to meet any personal needs. Unlike a Payday Loan, this loan is repaid in regular monthly installments until the debt, with interest, is paid in full. Most often, a personal lender offers from $1,000 to $100,000 for any personal need. Payment terms can range from several months to several years. However, it is important to note that borrowers with bad credit will receive less favorable loan offers than those with good credit.
How Can You Get an Emergency Loan?
First of all, you need to understand what type of emergency loan you are interested in. You should also pay attention to your financial situation, credit score and ability to pay off your debt on time.
At the moment, in order to get the best loan offer, you should pay attention to the following points:
1. Review lender requirements and state laws. First of all, in order to be approved, you will need to meet the eligibility criteria of the selected lender. These may vary by state law, but generally you will be required to provide your name, address, income, social security number, proof of identity, etc.
2. Compare different loan offers. There are a huge number of lenders in every state that provide Emergency Loans. That is why it is very important to compare loan offers in order to choose the one that has the best interest rates and loan terms.
3. Fill out an application. Once you have chosen a lender, you will need to visit the physical location or their website. Next, you will need to fill out a simple and convenient online application and provide the necessary information about yourself.
4. Wait for approval. Depending on the type of loan, your application may take from one to several days to be approved. If you apply for a Payday Loan, it can be approved almost instantly. After approval, you and the lender will be able to discuss the terms of the loan.
5. Get money. After you carefully review the contract and sign it, you will be able to receive funding. If you apply online, the loan amount will be transferred directly to your bank account.