In an ideal world, everyone would have an emergency reserve of savings that could be quickly and easily tapped when an unexpected financial expense reared its ugly head. But according to recent studies, only a small percentage of consumers feel confident in the amount of money they have set aside to cover surprise bills. When savings isn’t an option to turn to in a financial emergency, loans can be a viable solution. Here are a few loans that offer a helping hand when cash on hand is minimal, as well as some alternatives to loans.
Loan Options for Emergency Cash
Several different types of loans exist in the market today, from large, national banks and credit unions to local lenders that offer options like San Diego title loans. Each variety of loan comes with its own qualification criteria, total cost, repayment terms, and maximum loan amount, making it necessary to understand the differences. Car title loans provide access to quick cash for borrowers who have a vehicle they own with a clean title. The good news is that there is no credit check required, and loan amounts can range from $1,000 up to several thousand. Repayment terms vary for car title loans, depending on the amount borrowed and the needs of the borrower, but this type of loan is beneficial for those who may not qualify for a traditional bank or credit union loan.
In addition to title loans, financial institutions offer personal loans for quick cash. Banks and credit unions have more stringent requirements when it comes to who they will lend to and in what amount. However, borrowers with a solid track record of on-time payments with other lenders and steady income are likely to be approved. Loans from credit unions and banks could be as small as a few hundred dollars up to several thousand, and repayment terms are generally one to five years.
Alternatives to Emergency Loans
When loans are not an option, either because a borrower does not own collateral that can be used to secure the loan, like a vehicle, or because credit history isn’t strong enough to qualify for a bank loan, there are alternatives. A credit card cash advance may be an option for those with wiggle room on their credit limit. This option is helpful as it is initiated with an ATM withdrawal or transfer from the credit card to a checking or savings account. It is important to note that credit card cash advances often incur a higher interest rate than credit card purchases, and additional fees may apply for taking a cash advance.
Some individuals may shy away from traditional sources for emergency cash, like loans and credit cards, leaving them with fewer options. Borrowing from a friend or family member could be a solution. While this has the potential to offer quick cash, it has the potential to harm a close personal relationship if a borrower fails to repay on time or in full. Similarly, unloaded unwanted to unnecessary items to a consignment or pawn shop offers easy access to money when it’s needed. Unfortunately, selling personal possessions through these outlets means those items are gone for good and at a much lower price than they may have been worth.
Having an emergency savings account is the best option for covering unexpected expenses, but when that simply isn’t an option, loans can make all the difference. Before taking out a loan or considering the alternatives, have a plan for repaying the amount borrowed and be sure to evaluate the cost of borrowing over time.