You finally have a budget under control, only to be hit with an unforeseen expense. For those times when you need money now, here are some options to consider:
If your spending is already at a bare minimum, this might be a viable option for you. It has its pros and cons, though. The upside is that you’ll have the funds available without needing any form of credit or debit. But since this is usually a tiny sum of cash, it will not provide much help with significant expenses.
In short, don’t expect widespread banks or lending institutions to quickly give you a personal loan. The upside is that it can be easier to get than you might think, but there are some downsides. There’s often an interest rate attached to these loans. You’ll need to pay back not only the initial sum borrowed but any accumulated interest as well.
This may be a viable option if your emergency funds aren’t sufficient. You should keep in mind that this type of borrowing may lead you to a debt cycle.
Need money now? Well, This comes with the same downsides as a personal loan. But also gives you an interest-free loan, provided that your LOC is set up through your bank. This option allows you to transfer funds between it and your checking account whenever necessary.
A potential downside is that the LOC line of credit might only cover certain unexpected expenses. Examples are major car repairs or replacing damaged appliances in your home.
If this isn’t enough after the initial fee has been paid, then you’re on the hook for whatever additional cost may come with completing whatever task needs to be done to resolve the problem.
If you have the necessary equity in your home, this might be an excellent option to consider as well. A HELOC works just like a LOC, except that it’s secured by the equity of your home rather than unsecured cash or credit and can provide more flexibility for what you use the funds on.
A payday loan is a short-term loan typically due on your next payday. These loans are generally for small amounts of money and can be very expensive. Payday loans typically have high-interest rates, and they can also have fees for things like late payments or bounced checks. If you are considering a payday loan, you should be sure that you can afford the payments and be aware of the risks.
A title loan is a loan that is secured by the borrower’s vehicle. The vehicle is used as collateral to secure the loan. The borrower must have a clear title to the vehicle to qualify for a title loan. The loan amount is based on the value of the vehicle. The borrower typically has 30 days to repay the loan. If the loan is not repaid, the lender can repossess the vehicle.
Jeff Gitlen is a graduate of the Alfred Lerner College of Business and Economics at the University of Delaware. Gitlen has spent the past five years writing and researching on personal finance issues which include credit cards, student loans insurance, and other. His writing has been featured in top news publications among them are Bloomberg, CNBC, Forbes along with Market Watch.