An emergency may arise anytime and it is completely unpredictable. It could mean funding a wedding, further education or a medical emergency. A person may not always have the amount needed to meet such situations.
Therefore, opting for a loan to meet an emergency may be the best choice in critical times. There are various types of loans that may be availed of by an individual. Here are three common types of loans to choose from.
- Credit cards
For most people, getting a credit card is not difficult anymore. Moreover, a credit card loan is unsecured. Cardholders may use their credit cards to meet immediate fund requirements up to the maximum available credit limit during emergencies.
- Loan against property (LAP)
If a person has a property, he may mortgage it to raise money. Most institutions fund between 40% and 70% of the property value. Compared to other types of loans, the tenure for a LAP is longer (10 to 15 years). However, this option is beneficial when an individual requires a higher amount to meet an emergency.
- Personal loans
A person may not want to use a credit card or may not have sufficient limit to meet the fund requirements. Furthermore, he may not have a property that may be pledged to avail of a loan. An instant personal loan is beneficial in such cases. These loans may be acquired for short or long term. Although, the interest rates on personal loans may be higher than LAP or other secured debt, there are several benefits. Here are three advantages of personal loans
- No collateral needed
Personal loans do not require any collateral. This means an individual does not have to risk any of his assets to avail of a personal loan.
- Quick processing
The entire process of applying for these loans is quick and hassle-free. The borrower simply needs to provide basic information, such as name, address, and income on the lender’s website. On receiving the information, the lenders approve the loan within a short period of time. Applying for a personal loan online is the quickest way to meet emergency fund requirements.
A personal loan is versatile and may be used for any legal purpose. Therefore, the borrower may pursue higher education, fund a wedding, or meet any financial emergencies with this instant personal loan.
Emergencies are inevitable and being prepared for these is important. Knowing the various options that are available is beneficial in reducing the financial stress during an emergency. Before opting for an emergency personal loan, understanding interest rates, prepayment penalty, and processing fees associated with such loans is beneficial.