Life is a roller coaster, isn’t it?
Yes, you might have planned your monthly budget, investments, and other necessary funds, but suddenly an emergency comes out of nowhere!
A medical emergency, a sudden trip, or an immediate house renovation can be various instances where you might need an emergency cash loan.
In such situations, personal loans are one of the most reliable sources of instant money.
However, you might not get approval for an emergency loan if you have a poor credit score.
So, what are some accepted ways by which you can get money in no time?
We’ve got you covered with four emergency loans that you can try and get even if you have a bad credit score.
4 Types of Emergency Loans for Individuals with Bad Credit
1. Credit card cash advance
Not all of us know that having a credit card can let you have instant cash during emergencies.
Also known as a credit card cash withdrawal, it allows cardholders to withdraw money from an ATM.
The process for availing of this emergency loan is quite simple.
You just need to visit your nearest ATM with your credit card, like you would with a debit card.
A credit card cash advance’s biggest benefit is that you get money instantly without going through hassles of approval. In addition, it doesn’t impact your credit score separately.
All the credit card dues are reported collectively, including your outstanding monthly amounts and the cash withdrawal.
However, not all credit cards provide this facility, and you might need to enquire from your nearest branch.
Also, the withdrawal limit depends on your card type card’s credit limit.
This is absolutely not recommended as the cost of borrowing money on your credit card is often and nearly always exorbitant with rates up to and above 30%.
2. Government Budgeting Loan
If you are in receipt of certain benefits like Universal Credit or Disability Benefit you may be able to claim an emergency budgeting loan from the Department of Social Security.
You can either get an advance on any future Universal Credit payments or you can try for a Budgeting Loan which the minimum loan is £100 and the maximum is £812 if you have children.
Further details are available here: https://www.gov.uk/guidance/universal-credit-advances
3. Payday Loans
This emergency cash loan is potentially an easy-to-get loan under certain circumstances which can come in handy during various emergencies.
Typically, it is a short-term high-cost loan as you need to repay the loan on the next payday, as the name suggests.
A payday loan can be a lifesaver for salaried employees who are currently dealing with bad credit scores.
This money can help you meet your household expenses, pay your regular bills, medical bills, or other emergency expenditures.
Typically, the only mandate you need to follow is providing a post-dated cheque for the borrowed amount with the interest when setting up the loan.
This acts as a security for the lender. This is only the case if repaying in one month is a lump sum.
Otherwise, it’s monthly payments until the loan is repaid.
4. Look in your attic or basement
You never know what you might find lurking up in the loft.
Amongst the bats and spiders, you might just stumble across Auntie Bessie’s long-lost jewellery or Uncle Fred’s antique stamp collection – who knows?
If like us you’re more likely to find a bunch of stuck-together moldy cigarette cards worth precisely zip then it may be best to move on to our next suggestion.
Borrow from friends and family
Borrowing money from your close ones has always been a primary way to get instant cash.
Here you can get money without involving the cumbersome work of documentation and other formalities.
The best part here is no way someone would be asking for your credit score!
Pros and cons of emergency cash loans
Like every other loan, personal loans can come with upsides and downsides.
Here are some of the major pros and cons you must consider before availing of an emergency cash loan.
Pros:
Emergency cash loans, also known as personal loans, are pretty flexible, making them ideal for most emergencies. Even in terms of repayment, they can be quite flexible.
Except for home equity loans and loans against insurance, most personal loans are unsecured and do not need collateral.
However, if you are confident enough about the repayment, you must go for secured loans for better interest rates.
Unlike other loans, some emergency cash loans need minimal formalities like eligibility criteria, bank approvals, and other documentation.
Most verified lenders will have a fast application process making it comfortable and convenient for emergencies especially if they’ve seen you before and know your details.
Cons:
Most emergency cash loans come with high interest rates as compared to secured loans backed by collateral.
However, a good credit score can help get you better interest rates.
As most of these loans are unsecured, lenders can sometimes be much pickier while approving. Various factors can affect your approval and rejection, such as credit score, credit history, income, and how much debt you currently have.
If the borrower is at higher risk, such as an unstable job profile or a bad credit score, the amount of emergency cash loan can be limited.
Personal loans can be a great help while dealing with financial emergencies.
While availing of an emergency cash loan can be easy, higher interest rates and limited amounts can further add to your financial crisis.
The smarter choice is to opt for trusted loan agencies that provide unsecured loans with better credibility and flexibility.
Also, try to keep your credit score boosted so that you can apply for loans at superior interest rates.
It is best to keep yourself prepared at the end of the day because you never know what turns life would take!
