The hardest part of budgeting your money is when some unexpected financial emergencies happen. Whether it be a medical emergency, sudden car repairs, or renovations, handling these emergencies is both frustrating and costly. Moreover, getting the right loan option is essential in covering such expenses.
Fortunately, there are loan alternatives that can help you financially, regardless of the reason. Check out these alternatives below and see which one of them suits your needs.
Personal Loans
Personal loans are loan programs that cater to a wide variety of purposes. These loans came in different interest rates and loan limits and are categorized into two types:
Unsecured Personal Loan
Unsecured personal loans are loans that require no collateral, such as your property. These loans are usually offered to borrowers with high to moderate credit scores. Since there’s no collateral to seal the deal, most unsecured loans come with a higher interest rate, stricter payment schedules, and fines for defaults and late payments.
Even if you are a low score holder, you can have the chance of getting an unsecured personal loan. With its high interest rate and strict payment schedules, it might be best if you can look around for options or compare rates to see which program would fit you.
Secured Personal Loan
As opposed to the unsecured personal loans, secured personal loans require collateral of similar value, such as cars, houses, and land titles. Lenders will be more comfortable giving lower interest rates and flexible payment schemes as they have your property as collateral.
Take note that once you break the contract or set it on default. The lender reserves the right to claim ownership of your property assigned in your contract before giving the loan. For more information, visit liv at mb.
Revolving Debt
Revolving debt refers to your credit cards and their loan programs. As a credit cardholder, banks offer you to borrow their money under a set limit for any reason. Also, you can use it as many times as you need as long as you pay the debt.
This process revolves around taking a loan, paying it back, and retaking it; hence its name. And the best part is it doesn’t matter how many loans you can borrow at the same time. As long as you can pay its dues, then you’re good to go!
Payday Loans
Payday loans are loans with high-interest rates but with higher chances of approval. It’s designed to offer borrowers quick cash advances and have the loan deducted from your next paycheck.
Payday loans are great for covering minor emergencies, but each state has different regulations on this loan option. For example, some may have higher limits or higher interest than others. Some states have placed a ban on payday loans, though.
If payday loans are available in your area, you can get decent cash of around $500 to $1,000, depending on your state and workplace.
Auto Loans
As mentioned earlier, you can use your car as collateral if you’re looking for higher loans. Car loans work by momentarily giving up your car’s title in exchange for a loan of 50% to 75% of the car’s estimated value.
The lender reserves the right to repossess your vehicle should you fail to pay the entire loan plus fees. So, if you’re not too bothered about possibly losing your vehicle in a loan agreement, then Nevada auto title loans is a good option for you.
Online Loans
The internet has made impressive technological advancements that put all services, including loans and banking, into virtual space. This means that we have gone so far to the point that we can take out a loan on the internet.
This is especially great news for low score credit holders. Various online lenders offer low-risk loans regardless of your credit score. You can get approved within minutes of your first loan, and you have an option to loan higher amounts once you pay back.
Online loans revolutionize the convenience of banking, removing the hassle of a traditional loaning process, and making all arrangements done with a click of a mouse. In addition, online lending platforms require no collateral and most will not affect your credit score.
Since they are essentially a type of unsecured loan, their contracts may offer a higher interest rate and stricter penalties. Fortunately, their market is quite competitive, so you might find better deals if you search for different lending companies.
Should you find one, don’t expect too much from them to provide a considerable loan. As long as you’re consistent with your dues, you’ll work your way up in loaning more considerable amounts.
How To Choose The Right Loan
There are many loan types and contracts to pick, and the examples above are just blanket definitions of multiple offers with their terms. Thus, before choosing the best loan, there are different things you have to consider to narrow down your choices and get the most beneficial offer.
Credit Score Requirements
In loans and finance, your credit score often dictates what type of loans you can avail. While offers do not require looking into one’s credit score, it can still be affected as it is a standard indicator of how you manage your finances and how diligent you are in paying your debts.
As early as now, build up your credit score to have flexible options in choosing emergency loans. When you need to get these loans, you can get better options and have offers that are more suitable to you.
Time To Transfer Funds
Another thing to consider in an emergency loan is its transfer time. Ideally, any emergency or fast loan should take at least 1 to 3 business days to write it off on a check or have it into your account. Some loans may take over a week, but most of them are coming from banks and those with large loan offers.
Since time is of the essence when dealing with emergencies. You should consider its turnover schedule and see if you can hold out until it is transferred. If you need a quick cash loan, consider looking into online loans since they have the fastest turnover times at the cost of a lesser loan.
Fees and Extra Charges
All loans have different charges, and these charges are often present from the start of your loan up until its terms and other clauses of the contract.
Emergency loans have some fees you need to pay before being granted the loan. These are processing fees, which are used as payment for the whole “process” of determining your status and approval of the loan. These fees are also called originating fees, and the amount of these fees vary on what kind of loan is offered and its total loan amount to be granted.
Keep in mind that you can negotiate to lower the fee or altogether remove it, but that depends on your loan contract and may cause your deal to add interest.
To some, these fees may look like a deal-breaker since they reduce your loan before getting it into your hands, but it might be worth it, especially if your loan has favorable terms. Make sure the originating fees are only worth at least 1 percent of your total loanable amount, as lenders tend to have higher originating fees in their contracts.
Repayment Terms
Generally speaking, higher loans means better repayment terms. However, emergency loans have different repayment terms. Some may provide options to pay it sooner or later depending on what you’ve agreed upon.
For shorter loans, you may find yourself paying it for a few months and having more significant monthly payments. If you want to find loans with smaller payments, get yourself a bigger loan with 12-month payment terms.
Interest Rates
Interest rates are among the most significant make-or-break changes in negotiating a good loan. Interest rates are part of the proportioned amount that you’ll be paying aside from the loan itself. Interest rates exist for loans to continue for future borrowers.
Many factors could determine your interest rates, such as your credit score, term contract, and preferred repayment terms, making loaning a meticulous process. For emergency loans, however, their interest is often on the higher side.
Unless you have a financial asset, such as vehicles or property to provide as collateral, most emergency loans have higher interest rates in exchange for faster approvals, flexible payment schemes, and minimum requirements on credit score and payslips.
If you want to have lower interest rates, it would be best to build up your credit score while you can and consider looking for loans with shorter payment terms.
Final Thoughts
Taking loans is hard, and it takes a lot of responsibility to check its terms and meet its deadlines to avoid fees. Fortunately, there are so many loan programs offered with their unique conditions, rates, and limits. Therefore, you only need to research, compare their terms against others until you find the best lender and program for your financial needs.
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