When in difficult situations, the best way out is often to take out an emergency loan. The type of loan, and where you get it from, will depend on the situation.
When hit with an emergency, the first thing on your mind is where to obtain the money to deal with it, especially if the situation is life-threatening. It isn’t until later on that you think about how to pay off the money you borrowed. As a result of this poor planning, some end up in a bottomless pit of debt.
This doesn’t mean that personal and payday loans are bad. You see, no one forces us to take out a loan. In fact, before taking out a loan, you likely read through its terms and still took out the loan regardless. This is understandable, since emergencies don’t give out warnings, but there are other options to consider. Some of these alternatives provide faster processing and also come with low interest rates.
Before going for loans with sky-high interest rates and short repayment periods, it is in your best interest to consider some overlooked alternatives right here, especially when burdened by an emergency.
This article takes a look at 10 alternatives for emergency funding without high-interest rates. Even a small amount of savings can be highly beneficial in the long run.
Friends And Family
When you are hit with an emergency, the first person you are likely to call is someone close to you, like a close friend or family member. Whoever it is, this group always comes to mind first because close-knit relationships make it easier to ask for help. As an added benefit, you are likely to get emotional support on top of financial assistance.
That being said, it might still be a good idea to pay your lender an interest rate. This can be discussed based on your relationship with them. If you decide to pay interest, you should create a written agreement to avoid misunderstandings and possible fallout.
Turn To Your Company
Some companies offer emergency assistance to their employees during hardship. This is another option at your disposal if you fail to secure funds from friends and family. Such employee emergency fund programs can help you out of a difficult situation.
The best part of getting assistance from your company is that since you are their employee, you’ll likely benefit from low, and sometimes zero percent, interest rates. It’s usually easy to repay these kinds of loans since the company can simply make deductions from your salary each month. For the company, it helps with employee retention to keep people around and provide assistance through difficult times.
Furthermore, employers are often able to deliver emergency funds in a short amount of time, sometimes even less than two days.
Put Some Of Your Items on Sale
Sometimes it comes down to selling off some of your personal and household items to deal with an emergency. Before you start selling, you need to sort a few things out. For starters, figure out what you can do without. For example, if you have two television sets, you can sell one.
This is a great way to come up with quick cash, but the drawback to this method is you may be forced to sell your items for way less than their actual value. However, if the buyer is aware of your situation, they might offer a fair price.
Walk Into A Pawn Shop
Parting with an item that holds some emotional memories can be difficult. This is why pawn shops exist. You can use a personal item as collateral to obtain the funds you require. Pawn shops make money by offering personal loans in exchange for personal items as collateral.
Be careful with the type of pawn shop you deal with, however, as they are not all created equal. Go online to find legitimate pawn shops in your area which offer favorable terms. These terms will vary depending on the state you reside in.
Don’t worry, you won’t be the only one. In fact, about 8 million households in America resort to pawn shops for loans. This is because the shops offer low interest rates compared to other lenders.
Get A Loan Using Collateral
Do you own some property or perhaps, a car? This might be your next option, should you fail to secure funds from any of the options listed above. You can use your property or car as collateral to get a huge amount of money fast.
This can work in your favor, especially if you have a good credit history. The lender will offer you the loan as fast as possible if you mention it’s an emergency. To strengthen your case, you can let someone who knows you tag long to help build a strong case in terms of your ability to make payments.
Does Anyone Owe You Money?
At some point in life, you’ll need to borrow some money and end up in some kind of debt. Most of the time this is triggered by an emergency.
Chances are that you’ve lent some money to a friend or family member in the past who was in the same situation. This types of loans can have a impact on many family business factors. You might have forgotten about the loan or something happened that prevented you from getting the money back.
If you have some money lent out, this is the best time to ask for it. Even if the amount was small, it’ll go a long way in helping you out in your current emergency. To do this, you’ll need to go through all your past lending activities to make certain they have outstanding debts and collect as soon as possible.
Consider Quick Cash Lenders
If the only option remaining is quick cash lenders, don’t worry about the high-interest rates you’ll pay going forward. There are a number of ways you can manage your payments. This is where self-discipline and personal finance management skills will come in handy.
First off, you’ll need to conduct research on the various cash lenders available in your state. Once you find the lenders available, proceed to identify their requirements and write down what you have. You’ll also need to analyze the loan terms, the repayment period, interest rates, and whether you’ll need to put up any collateral.
By shopping for quick cash lenders, you cut down on the time you’d have spent walking from one lender to another. After you have received the funds, you can take care of your emergency and concentrate on paying back the lender. Should you come across a huge sum of money, you can then pay off the balance in full.
The Places You Might Have Hidden Money
Have you ever come across some money you hid a while back? How did you feel? Well, the feeling is unexplainable. Some people do this on purpose, while others stash money away, only to forget the location after some time. If this is you, check under your mattress, in the pockets of your jeans, or even inside your old shoes.
Whichever category you fall in, these hidden “treasures” can salvage your situation. Regardless of how small the amount is, remember anything that will contribute to a portion of the emergency will be of great help.
Options With Low or Zero Interest Rates
If you are in need of a huge loan amount to care in an emergency, the best way to go about it is to gather funds from various sources. By doing this, you spread out the money into either low or no interest loans, while controlling those with higher interest rates based on the principal amount.
This strategy helps you to acquire loans with lower payments when compared to taking out a single loan from one lender. This will keep your fixed expenses under control while you pay off your loan.
Write A Promissory Note Or A Personal Appeal
Apart from this situation, you might have other loans you’re paying every month. When an emergency hits, you could use that money. This is where a promissory note or a personal appeal comes in.
These two options allow you to defer payments to certain lenders, or people, in order to divert the money to more pressing needs.
Seek help from people like brokers or business partners when trying to appeal to your landlord, developer, or other lenders. The former is quite helpful if you’ve given out post-dated checks. You can make an appeal stop their deposits until a time when funds are accessible. You can also go further and talk to your bank about payment cancellation to avoid high penalties associated with unfunded checks.
The tips listed in this article have left out some of the first stops many people with emergencies usually pull. They include borrowing from your retirement plan, taking out a multi-purpose loan or filing for bankruptcy loans.
No one prepares for an emergency. Therefore, it’s important for you to know how to face such challenges, if and when, you come across them. Getting money without a chip on your shoulder will alleviate the stress of interest payments while allowing you to concentrate on and fix the situation at hand to finally get your life back on the road.