Useful Tips On Emergency Loans That Will Help You Make Informed Decisions
The latest financial security index survey by Bank rate indicates that only 39% of Americans could cover life’s unexpected emergencies with their savings. With all sorts of calamities popping up when you least expect, it is important to have some savings set aside for rainy days.
Life is however, unpredictable, and sometimes even with a carefully planned budget, things can get out of hand leaving you financially crippled. If you don’t have any savings stacked up in an emergency fund, your only way out would be a short-term emergency loan.
So what are emergency loans?
Emergency or payday loans are short-term loan facilities with repayment periods of between 2weeks – 2years. These loans are available to individuals who are stuck and need cash real fast to sort out a nagging problem.
You should, however, not use these loans as a long-term financial solution. Their interest rates and APR are usually high making them very expensive.
Features of emergency payday loans
Since these loans are supposed to give you a quick access to the funds you need in a crisis, they should:
- Have a quick turnaround time – the faster you get your loan approved and funds credited to your bank account, the better. Most lenders have simplified the loan application process and the approval time is usually shorter. If your request is approved, you can have the cash on the same day or as soon as the next business day.
- Administration fees and interest rates – the amount charged as interest rate and loan fees vary from lender to lender. The state laws, however, have a regulation in place to curb payday lenders from exploiting vulnerable borrowers. These amounts differ from state to state but in most cases, lenders charge an interest rate of 10% on every $100 borrowed.
- The loan amount – most states allow borrowers to borrow from $500 – $1000. The amount a lender will lend you, however, depends on your capacity to pay back. And they will use your salary or cash inflow to gauge that.
Benefits of emergency loans
- No credit checks – you don’t need to worry about a poor credit history. Most lenders don’t perform credit checks and are only interested in your capacity to pay back. Borrowers with bad credit can also apply and get approved.
- No restrictions on how you use the loan – payday lenders don’t ask or care how you intend to use the funds.
- A large pool of direct lenders to choose from – the loan market is flooded with several lenders offering different terms. It is important to do your research and settle for with affordable rates.
- Instant access to funds – unlike traditional banks that will perform lengthy credit checks and take forever to approve your loan request, most payday lenders have an easy application process and a fast loan approval time.
- No security – you don’t need to offer your valuables as collateral to get a loan. Your post-dated check is security enough.
- Can save you from the embarrassment or legal action of bounced checks – if have some debts to pay out through a direct debit process, and you don’t have any money in your account, an emergency loan can help you out.
They are expensive – these loans have a high interest rate as compared to other loan products. It is, therefore, important to use them only for short-term financial problems.
Short repayment term – you will be expected to pay back the full loan amount plus all the associated fees by your next paycheck. This, in most cases, leads to borrowers rolling over their loans or borrowing more to get by.
What you need to know before applying for a cash advance
Emergency loans are a great solution to your short-term financial crisis, but they could lead you into more debt if you don’t approach them with caution. These are some of the things you need to consider before applying for an emergency payday loans:
- Be sure you are able to pay back the loan before you even apply for it – late repayments could lead to additional charges and this could mess your finances.
- Compare different lenders before settling for any. You should use a lender with affordable rates. Also, go for lenders who can flex your repayment schedule if you are stuck.
- Before signing any loan agreement form, make sure you read and understand the terms and conditions. Ask questions and append your signature only when you understand their loan program. Check on all the hidden costs, administration fees, and repayment schedule.
At….. we understand how frustrating it is to have a financial emergency without cash. We, therefore, make it easy for you to get cash instantly. By filling our loan application form online, you get connected to a pool of direct lenders who will review your request and approve it fast.
Once your loan is approved, you’ll get directed to the lender’s page where after reading the terms and conditions, you’ll sign the agreement form after which the funds will be disbursed to your bank account on the same business day.