Emergencies, by their very nature, are a cause for stress, and if you’re cash-strapped, this can further exacerbate your situation.
Therefore, quick and effective solutions are the need of the hour. Being able to access funds immediately can be a lifesaver in such situations, no matter what your emergency is.
However, finding a suitable credit option can seem like an overwhelming task in such situations. From loan terms to interest rates to credit scores, there are a variety of things you need to consider when securing a loan.
That’s why, in this article, we bring you the top 4 emergency borrowing options that can come to your rescue in an emergency.
#1. Personal Loans from Direct Lenders
Fintech has transformed the way people borrow and access credit, and direct lenders have played a pivotal role in that. Most lenders use online platforms to issue loans, making them an accessible option whether you're looking for a mortgage or just a fast £1000 loan to tide you over.
One of the top benefits of borrowing a personal loan from a direct lender is that they require minimal documentation and have quick approval times.
Direct lenders also use a different algorithm to assess your creditworthiness, so you’re more likely to qualify for a loan from them even with poor credit. They also don’t have any intermediaries or brokers in between, which means you incur no hidden costs or additional fees.
Since direct lenders use automated systems to assess loan applications, they offer a much faster borrowing process. As a result, you’re able to receive the money quickly, making it an ideal credit option for emergencies.
#2. Borrowing from Credit Unions
Credit unions are a type of non-profit lending institution that works like a financial cooperative. They provide financial services for their members or community to build healthy financial habits.
This includes issuing loans at much lower interest rates compared to traditional lenders and often involves flexible repayment options.
Since they’re not operating for profit, they’re able to offer borrowers personalised financial solutions at affordable rates, which can be helpful in an emergency.
Borrowing from a credit union can also come with additional benefits like insured deposits, no-fee checking and savings accounts, and better customer service.
Credit unions work towards financial inclusion and promote financial education. This means no matter your financial situation or emergency, they can help you with solutions that improve your finances in the long run.
#3. Payday Loans or Paycheck Advances
Payday loans and paycheck advances are one of the quickest ways to access credit if you’re employed. Both come with their own set of benefits, and one may be better suited than the other, depending on your financial emergency.
Payday loans are a type of short-term loan that can help you meet urgent fund needs. These are generally small amounts of money and have a short repayment period, i.e. till your next payday.
You can access these easily, sometimes within a day, and need minimal paperwork, like proof of employment. There are no credit checks involved, so you can consider borrowing a payday loan minus the stress.
Paycheck advances on the other hand are offered by your employer. As such it's not a credit option in the traditional sense as you are simply accessing your earned wages ahead of time.
Since it's your salary, you don’t have to deal with interest or any additional fees like traditional loan options, making this a suitable solution for a financial emergency.
#4. Charities and Community Organisations
Community organisations and charities sometimes offer financial assistance to those in emergencies. Unlike traditional loan options, they offer them at much lower costs. Most community organisations offer interest-free loans which can be helpful to meet urgent needs.
Charities also lend financial aid in the form of grants, which do not have to be repaid. However, you do need to meet their eligibility criteria, which may differ from charity to charity.
While you can expect to receive financial assistance, it's possible that you won’t receive the entire amount you need. This is because they have limited funds and a significantly high demand for assistance.
Another thing to bear in mind when considering borrowing from charities and community organisations is that they can lend only for specific purposes. For example, charities providing medical aid will only be lending assistance towards pet medical bills or other veterinary expenses.
Conclusion
Finding a suitable credit option during a financial crisis can be stressful. However, there are alternatives you can consider to make your borrowing process easy and relatively hassle-free. We hope this article has provided you with helpful information about loans you can consider to manage your emergency expenses better.
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