For many Americans, money is tight. It can be a struggle to keep up with monthly bills and personal expenses. A lot of Americans live from paycheck to paycheck. This leaves very little opportunity to save money or personal loan have a fund for emergencies.
When an emergency arises, there is usually no money to help. An unexpected bill, car repair costs, or even an injury or illness that leaves a person unable to work for a few days, can create serious financial problems. In these situations, a personal loan can help.
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How a Personal Loan Can Help
When an unexpected expense arises, getting money to cover that expense as fast as possible is vitally important to many households. Individuals can apply for a personal loan to get the funds they need to cover those costs.
This gives households the opportunity to take care of various expenses immediately. Then, they can take their time to pay the personal loan in small increments. This helps to spread the costs over a longer time and lessen the financial burden they may face.
An Unexpected Bill
Higher than usual utility costs can be a major surprise and put a great strain on a household’s budget. If the utility is not paid right away, it can lead to late fees and other charges. Eventually, the utility will get turned off. This creates more complications with reconnection fees and other issues.
A personal loan can help households pay off those unexpected bills right away. This eliminates any late fees or termination costs utility companies can charge. It also helps to spread the cost over a longer period of time to help maintain a household’s budget.
Car Repair
A car breakdown can be a serious problem for those who need to get to work. If that person is unable to pay for the repairs immediately, they may be forced to miss work. This can cause lost wages and create a more serious financial problem for the individual.
With a personal loan, individuals can take care of their car repairs and get back to work quickly without missing a day. This can prevent serious financial issues that can result from being unable to get to work or even the costs of taking a cab or ride service.
Illness or Injury
For individuals who live paycheck to paycheck, any missed days of work can be a difficult challenge. If they get sick or injured, not only do they accumulate medical bills, but they also lose their regular wages. This can create a financial problem that can be difficult to recover from.
A personal loan can provide the money needed to cover the immediate medical costs and the lost wages from the few days out of work. This can help individuals keep up with their bills and regular household costs without creating further problems.
Where to Get a Personal Loan
There are many financial institutions that offer personal loans. Personal loans are very different from other loans, such as a mortgage or a car loan. With a mortgage or a car loan, there is collateral that helps to secure the loan. This is the house with a mortgage or a car with a car loan.
With a personal loan, the loan is often considered an unsecured loan. This requires financial institutions to rely on a person’s credit score and income to determine if the person is able to repay the loan properly.
Banks and Credit Unions
Banks and credit unions are the most commonly used financial institutions for getting any type of loan. Personal loans, however, are often more difficult to get from either institution. In general, credit unions are claimed to be a better option over large banks due to their ability to provide lower interest rates.
When applying for a loan at one of these institutions, an application may be submitted. Often, this application requires an in-depth look at one’s financial situation. There will be a check on the individual’s past credit history, as well as their financial standings.
This process can be quite lengthy. Waiting for a personal loan from one of these institutions can often diminish the purpose of the loan to pay off immediate debts. For those with less than perfect credit, the end of this process could result in a denial.
At the end of the process, the emergency situation that required quick money has been made worse. There is no money to cover those costs. And often, there is a hard credit check on the individual’s credit history that can lower their credit rating.
Alternative Lende
There is an alternative to applying at a traditional bank or credit union. There are various online lenders that offer short-term personal loans to help individuals with their financial emergencies. These options can be a welcomed alternative to the long and tedious application process offered by banking institutions.
These online lenders provide a plethora of benefits for those in need of a quick loan to help with an emergency. Unlike traditional institutions, the application process is streamlined to allow customers the ability to get an answer quickly, often in as little as a few minutes.
Individuals also do not have to give a full account of where they will be spending the money. Borrowers have full discretion on how and where to spend their money. This allows some to be used for car repair or a bill, while using the remainder to cover daily expenses, without any question from the lender.
Borrowers also do not need to provide any type of collateral and each individual is treated with dignity when applying for the loan. These companies also do not require a traditional credit check or a high credit score to be approved for the loan.
Once the process is complete and the borrower is approved, they can receive their money quickly, often on the same day. Individuals can either pick up their money at their store location or have it wired immediately to their bank.
This quick money allows customers to cover their emergency without delay. This process does not impact a person’s credit score and individuals can pay the loan back in 12 monthly payments. There is also no penalty for paying it off early, unlike some bank loans.
Everyone faces financial issues from time to time. Often, they need a helping hand to get through those tough times. However, it is important to be financially responsible and only ever borrow what is needed. This can help to prevent future financial problems.