Dealing with an emergency expense can be tough to start with, but facing one without the savings to handle it can be even more stressful. But the reality is, emergencies happen whether you’re prepared for them or not, so it’s important to understand how to prepare yourself for whatever comes your way.
Your first line of defense against an emergency should generally be your emergency fund. Typically, it helps to take a portion of your paycheck and put it aside into a fund specifically for emergencies. But this can be a long process and you may not have a ton of extra money each month to put towards your savings. So, if you do run into an emergency expense without the savings to handle it, emergency loans online may be what you need to help you get through this rough patch.
In this article, we’ll run through some of the key details surrounding emergency loans, like when you should (and shouldn’t) consider using them, how to apply for one, and things you should consider when deciding which loans to apply for.
What are Emergency Loans Online?
Before we get into the ins and outs of online emergency loans, we’ll need to start by going over what they actually are. Fortunately, they’re very much what they sound like.
They’re personal loans that you apply for online and that are meant to help you handle emergency expenses. These can come in the form of installment loans, lines of credit, and more. But why opt for an online loan versus in-person? Well, there may be a few benefits:
- Speed: Because online lenders generally rely on technology throughout the lending process, the speed at which your application can be processed may be quicker than it would be with a brick and mortar location. On top of that, the process of filling out the application for an online loan may be relatively quick and can be done in minutes.
- Convenience: The quick and convenient nature of applying for emergency loans online means that generally, you can apply for a loan, receive funds, and repay them all online. You won’t have to deal with the inconvenience of traveling to a physical branch and applications can typically be started 24/7.
- Access: With some online loans, your credit score won’t be the sole or most important factor considered when determining if your application can be approved. This means that you still may be approved with bad credit.
When Should You Consider Applying for One?
When you’re looking into loans of any type, you’ll need to have a good understanding of both the intended use of the loans you’re considering applying for, as well as your financial situation. This can help you evaluate whether you should be applying for a loan at all, and what types of loans you should be looking at.
So, like we’ve already established, emergency loans are intended for emergencies and emergencies only. But sometimes, what constitutes an emergency might seem a little hazy, so it may be easier to get a better sense of when you should be considering them by looking at when they absolutely shouldn’t be used. These can include situations like shopping sprees, vacations, or even long-term savings plans.
If you need a better idea of what an emergency situation looks like, it could be something like:
- A home repair that could lead to more problems if gone unchecked.
- A trip to the emergency room.
- A car repair that could force you to miss time at work.
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Just remember, if you do run into a situation where an emergency loan would be appropriate, it’s still important to make sure that the loan is something you can actually afford. You don’t want to get stuck in a cycle of debt that leaves you in an even worse position than you were in to begin with.
Applying for Emergency Loans Online
If you’ve looked at your situation, don’t have an emergency fund (or not one that’s big enough to cover your entire emergency), and feel like an emergency personal loan is right for you, here are some steps you can take to get things underway.
1. Check Your Credit Report
Even with online emergency loans, your credit score may play a role in what loans you may be approved for, so it’s good to have an idea of what it is. You can check it by:
- purchasing this information from one of the major credit bureaus (Equifax, TransUnion, Experian) or from FICO
- looking for services online that give you your credit score for free
- looking at credit card or loan statements, as some financial institutions give this information to their customers
2. Do Your Research
Always evaluate potential options before applying. Research the various online loan lenders or servicers out there, look at the rates and terms of different loans, and try to find the best option for your particular situation.
3. Get Your Documentation in Order
When you’re in an emergency situation and need a loan, speed is a key factor. One thing you can do from your end that may help to speed up the process is to get the personal information you’ll need for the application at the ready. While different lenders will have different requirements, you typically need to show things like your Social Security number, banking information, and proof of income.
Things to Consider When Choosing Emergency Loans Online
Whenever you’re going into a situation where you’re going to be borrowing money from a financial institution, it’s important to make sure you’re asking the right questions. Here are some things for you to consider when you’re looking for emergency loans online.
1. How Fast Will the Loan be Funded?
If you’re looking at loans for an emergency situation, there’s a good chance that speed is going to be at the top of your list of priorities. The time it takes for your loan to be funded, once it’s approved, will vary between lenders. With some, it may take a few business days to get funded, while you may even be able to get funds on the same day you’re approved with others. The speed at which you’ll need funds will depend on your situation but make sure to look out for this detail when you’re evaluating lenders.
2. How Much Will the Loan Cost?
On top of speed, another incredibly important detail you’re going to want to pay attention to is the cost of the loan. Online lenders will often have a page dedicated to the rates of their loans, so make sure to take a look at them and compare what’s being offered by different lenders.
And as a bonus, look out for lenders that have a loan calculator that can help you estimate how much interest and/or fees you’ll be paying as well as your monthly payments. This will help give you a better idea of how your loan payments will fit into your budget and if you can afford it in the first place.
3. What Else Does the Lender Offer?
Outside of the cost of the loan, see if the lender has any features that could benefit you in some way. Maybe they have a lenient policy when it comes to late fees, or maybe they don’t penalize you for early repayment. Whatever it is, make sure you take a thorough look for anything that could set one lender apart from another, other than the usual details.
Ready Yourself for Emergency Situations
Anticipating an emergency is not always an easy thing to do. It can be nearly impossible to know when something’s going to pop up, how it’ll find its way into your life, and how you’re going to go about digging yourself out of the financial hole created by an emergency. For these reasons, it’s important that when your financial situation stabilizes, you know what to do to prepare yourself for the next emergency you may end up facing.
Like we’ve already mentioned, the first step is to build an emergency fund. Remember that this doesn’t need to be an overnight process. If you feel like you don’t have very much room in your budget to be contributing to your savings, start off small. Even if you only manage to save up a few hundred dollars before your next emergency, that can go a long way in helping you manage the expenses.
But remember, if all else fails, emergency loans online may be a useful option in times of emergency. Just make sure you do your research, evaluate your options, and ask the right questions on your quest to find a loan that’s suited to your situation.
If you’re in the market for an online loan, take a look at the borrowing options that MoneyKey has to offer!