Personal Loans For Financial Emergencies

In an ideal world, two things would, and would not occur:

* We would always have sufficient savings for financial emergencies.

* Financial emergencies would never occur.

However, we do not live in an ideal world, and unfortunately, financial emergencies do occur, and sadly not all of us have saved enough money to cover and pay for these emergencies.

What constitutes a financial emergency?

Any event that forces you to pay out more than you had prepared and planned to pay out.

A broad definition at best, but financial emergencies can be a wide variety of things:

* Car repairs

* Boiler repairs

* Home repairs

* Travel

* Losing ones job

* Reduction in household income

* Divorce

* High debt levels

* Unexpected dental or medical expense

This list can go on and on as what constitutes an emergency financially can can vary among us. The fact is, we need to have money saved for these emergences. So how much money should we have saved for financial emergencies? How long is a piece of string?

Ideally, we should be saving as much as we can for our “rainy day” fund, however, with the cost of living these days, and wages being what they are, saving money can prove difficult.

So what do you do if you experience a financial emergency, and do not have the cash on hand to cover the expense?

Here are a few options.

Save-up

Whatever the nature of the emergency, and the cost, can you save-up for the repair or whatever the emergency is, over a period of time?

This means in an example of a car repair:

* Is the car safe to drive?

* How much is the repair?

* Can you be without the car for a period of time?

* How long will it take you to save the money required for the repair?

If you are like many of us who need our cars to get to and from work, and there is no public transport, you need the repair done immediately.

There will be no time to save for the repair to be done in a month or two.

In the example of a washing machine breaking down, we could go to the laundrette for a month or two and save for the repair, or a new machine.

In the example of a fridge/freezer, if they go up, you cannot wait to get one repaired or replaced, they are an immediate item that you need, and needs to be repaired or replaced. So not much chance of saving the money in this instance.

This leads up to if you have no money saved for a financial emergency, and cannot do without the item or the nature of the emergency is such we need to restore things to their status quo as soon as, we need to look at borrowing the money to cure the emergency. This means some form of lending.

Types of Borrowing and Personal Loans for Financial Emergencies

When you have a financial emergency, your options with that emergency are dictated by how much the emergency is going to cost you. A simple repair that may be £100 or so, you may be able to just borrow the money from friends or family.

It is not uncommon for family to lend money back and forth to each other, the Bank of Mum and Dad has been around for some time now.

However, there may come a point in time, and an amount, that seeking out a “borrow” from friends and/or family is not possible.

Then we need to look at other options.

Credit Cards and Overdrafts

If you already have a credit card, or an overdraft, these can be a good way to cover a financial emergency, or a cash shortfall, but there are some caveats to this.

Overdrafts usually need to be paid back when your next wages are paid in, the overdraft just sucks up what it requires to be paid back. This is OK, if you can afford to do this and have it happen. If not, you are still down, or in the hole the amount of the emergency and your overdraft.

With credit cards, you pay for the emergency, and spread the cost out over a few months or longer. This is good to help budget, but also you need to be dedicated to paying the credit card off, by paying more than the minimum monthly payment.

If you do not have a credit card or overdraft, you can apply for these, however, for a credit card you may need a good credit score and credit, depending on the card issuer’s lending criteria, and the credit limit you are to be given.

You can discuss getting an overdraft with your bank, and if you feel you need to repay the overdraft in monthly instalments, you may want to consider a personal loan.

Instalment Loans

If you are in a situation where you have a financial emergency, and need a loan, and you want t be able to pay the loan back over time as to allow you to budget for things, personal instalment loans is one option.

You can request a loan of the amount you need, and also see the various repayment terms available to you.

A loan of a couple thousand pounds, is easier to repay over 12 months, or possibly a longer term 18 months or more, to reduce the monthly payments.

In most instances as a personal instalment loan is unsecured, meaning there is nothing securing the loan, no collateral, the borrower may be required to have a fair to good credit score. Each lender has different lending criteria and scoring they use.

It may be possible for someone to get an emergency instalment loan without good credit, they may just pay a slightly higher interest rate.

Should you have bad credit, and a financial emergency arises, there are options.

Payday Loans

Payday loans are short-term loans that are to be paid back on the borrower’s next payday. These are good for someone who may have bad credit and not get approved for a loan through traditional lenders.

The borrower just needs a job, a bank account, and show affordability to repay the loan.

Guarantor Loans

Guarantor loans are instalment loans that are not based on the borrower’s credit rating, but the fact there is a guarantor and the borrower can afford to repay the loan.

The guarantor is there to pay the loan, should the borrower default.

Guarantor loans are popular and good for financial emergencies as they can be paid back over 12 months or much longer, up to 60 months. This makes the payments more affordable, and able to fit into one’s budget.

So while unfortunately financial emergencies are going to arise, there are ways to be prepared, by saving as much as we can, and also there are options in borrowing and getting a personal loan to help cover the emergency.

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