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If you’re currently in a situation where you have to cover an unexpected expense, you know that generating the money you need right away isn’t an easy job. Having an emergency fund is a great help when it comes to this kind of situation.
However, most Americans don’t even have extra cash saved up for this purpose, with some trying to make ends meet on a stipend. For this reason, saving for the rainy days is just impossible for many.
Fortunately, several types of unsecured loans are readily available for those who need emergency fund assistance.
Unsecured Personal Loans: What Are They?
Unsecured loans are sometimes called emergency loans or quick cash loans. They are often used to cover the costs of unexpected expenses. The loan amount will depend on how much funds you need to cover the unexpected expenses.
However, emergency loans typically offer small loan amounts. The amount tends to range from $250 to about $1,000. They are usually fast, and deposits are expected to happen within a day or two after you get your loan application approved.
Since this type of loan is unsecured, you aren’t required to put up collateral, such as your car or home. However, some lenders might require you to pledge one. So, it’s best to make sure you know what you are up to.
It’s also important to know that unsecured loans used to pay off unexpected expenses tend to vary by lender. This means that the loan standard, requirements, application process, and the like are different. Also, when comparing unsecured loan lenders, it’s best to know how much you can borrow, the minimum credit score, fees, income requirements, etc.
Types Of Unsecured Loans You Can Use To Pay Off Unexpected Expenses
The following are some of the common types of unsecured loans that can help pay off your unexpected expenses:
Unsecured personal loans use your credit score and credit history to determine your eligibility, loan interest rate, and the loan amount you can borrow. If you have a high credit score, that means you’ll get the best loan offers from a lender. However, if you have a low credit score, you might end up with a loan offer that comes with a high-interest rate and a small loan amount.
If you’re planning only to borrow a low amount, a payday loan might be for you. This type of loan doesn’t require any credit check, so you don’t have to worry about poor credit. However, it would help if you took caution since several lenders charge high-interest rates on payday loans.
Credit Card Advances
If you currently have a credit card, you can choose to borrow some cash to cover your unexpected expenses through your available credit balance. The interest rate for credit card advances isn’t the same as the APR for your regular purchases, with the latter going higher than the former.
Extra Tips For Paying Your Unexpected Expenses
Below are some tips you might want to consider when it comes to paying your unexpected expenses:
- Keep your financial records accessible and organized. If you have your financial records ready in place, it would be easier for you to apply for any loan and get the money you need.
- Consider borrowing from a credit union. Credit unions can offer low interest rates on loans.
- Try out online lending platforms. Online lenders are known to process your loan fast, within a day or two after the loan approval.
- Check out your prequalification offers. Prequalifying for a loan is a great way to take a look at your chances of getting your loan application approved. It’s also the best way to compare interest rates from different lenders.
- Have a financial plan. Since you can’t plan for every emergency, it’s best to save up money for an emergency fund to ensure that you’ll have the extra money in your account if an unexpected expense comes your way.
Comparing Loan Offers
It’s best to get a loan that fits your needs and isn’t heavy on your finances. Shopping around to compare loan options can help you find the best loan for you. As mentioned above, prequalifying for a loan is a great tool in helping you shop around.
Several lenders would permit you to apply for prequalification by requiring you to give them basic details about your finances and your personal information. Prequalifying helps you get a glimpse of your potential loan rates and terms. This method typically doesn’t require a hard inquiry on your credit.
To Sum It Up
It isn’t easy to find cash right away to cover your unexpected expenses. However, there are several ways you can do so. Taking out an unsecured loan can offer you the fast cash you have been looking for; you just need to pick the loan that’s right for you.