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5 Ways Personal Loans can Help During Financial Emergencies

12/24/19 Ricky Baizas

During an emergency or natural disaster, you probably already have a plan in place, but what about for financial emergencies? In the event you are injured, or have damage to your personal property, you may incur hundreds or thousands of dollars in costs that could test the limits of your bank account.*

 

While an emergency savings fund could cushion the blow of unexpected costs, given the limitations of their current income and expenses, many are not able to save. Not having one could put you at risk for late payments, or fees. However, there is an alternative to having missed payments wreck your credit score: Personal loans can stem the tide of short term financial difficulties. You can apply for one from an alternative lender, receive cash fast and take care of those rapidly approaching bills. This will allow you to face a variety of financial emergencies head on.

 

Five ways personal loans can help during financial emergencies:

1. Car repairs

Depending on your car’s model and mechanical requirements, if your car breaks down or gets into a collision, you may be footing a hefty auto repair bill. This could add to already rising annual maintenance costs. In 2012, the average maintenance cost per vehicle annually rose from $514 the previous year to $537, according to the U.S. Bureau of Labor Statistics. Rather than pay more for your car repair or maintenance, you could apply for a personal loan through a simple application process and receive the needed funds.

2. Medical costs

When a sudden injury or illness happens, you may not be able to work. In the meantime, bills could pile up. Your insurance may not cover all your medical costs, which could result in out-of-pocket expenses. With the potential for high health care bills, you could apply for a personal loan to pay them quickly. This could reduce the risk of going into medical debt.

3. Outstanding debt

Credit card debt is a serious problem for many Americans. It becomes worse when their current incomes are unable to cover their monthly credit card payments. This debt could also add to the rest of their budgetary expenses. It can slow if not completely prevent them from saving for their financial goals. According to Bankrate, almost 1 in 4 Americans have a higher volume of credit card debt compared to what they have in emergency savings. As your credit card balances grow you could use the funds from a personal loan to reduce high-interest balances and consolidate. Depending on the interest rates for your credit cards, this could also save you money.

4. Rent repayments

When your rent due date is coming and you do not have sufficient funds in your account, you may be at risk for eviction. To pay your rent on time, applying for a personal loan could give you cash fast. You can even have the money deposited into your account in as little as one business day after approval.

5. Utility bills

Utility companies may report your bill payment history to credit reporting companies, and one late payment could hurt your credit score. One option to avoid those circumstances is to use a personal loan to cover your utility bills. It’s a good option to have to keep your payment history intact.

 

Sources

http://www.bls.gov/opub/btn/volume-3/pdf/americans-aging-autos.pdf

http://www.bankrate.com/finance/consumer-index/credit-card-debt-still-a-big-concern.aspx

 


*This article has been prepared for general information purposes only. The information presented is not legal, financial, tax or accounting advice, is not to be acted on as such, and is subject to change without notice.
 
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