5 Alternatives to Emergency Loans When You Can’t Get One

Unforeseen expenses or a financial emergency can leave your best-laid plans in shambles and you may require some financial support to get back on track.

Scouting for loans during an already stressful situation is the last thing you need. However, as grim the reality may be, emergency loans are tailored specifically for such situations.

Emergency loans offer a quick way to access funds for unexpected expenses, but their high interest rates can make you reluctant and unsure if they are your best option. Fortunately, there are better alternatives to emergency loans if you’re unable to get one.

Direct lenders, credit unions, non-profit lenders, short-term loans, and payday loans are all good alternatives to consider. Most of these alternative credit options offer low interest and are cost-effective, making them accessible for those with less-than-ideal credit scores.

In this article, we’ll explore a few of these options that can help you meet your urgent expenses in an emergency.

1. Payday Loans

Living paycheck to paycheck in a slow economy is an everyday challenge many of us face. An emergency or unforeseen circumstance requiring quick funds can only further add to this stress. Fortunately, those with steady employment can always consider a payday loan.

While payday loans are a temporary fix to meet unexpected expenses, they can be used to tackle costs like pet care bills, urgent car or home repairs, or even pay off small debts with higher interest rates.

Modern technology has made it possible for financial institutions and lenders to offer payday loans online. While most emergency loans often come with stringent credit checks, lenders tend to conduct softer checks for payday loans. This makes it a viable option for those with low credit. They also have faster approval rates and require minimum documentation, making it a convenient lending option.

When used responsibly, a payday loan can help you manage emergency expenses and help you get through a difficult time.

2. Emergency Funds or Personal Savings

Emergency funds are a key component of setting up an effective budget. They’re meant to help you deal with unexpected expenses and essentially serve the same purpose as an emergency loan, minus the borrowing aspect.

It can be stressful to scout for loan options when you are crunched for time. Dipping into your savings or emergency fund to meet urgent expenses is both sensible and offers a quick resolution for your financial challenge.

An emergency fund can be started with any small amount as long as you’re consistently setting aside some money for it. While financial pundits suggest they should ideally be three to six months’ worth of essential expenses, no amount is too small. Savings like this can be a cushion in times of financial distress and reduce the possibility of accruing debt.

3. Credit Union Loans

Credit union lenders are customer-centric and make the borrowing experience as hassle-free and personalised as possible. They not only help you find the best credit options taking into account your financial situation but also offer low interest rates. This makes them suitable lenders during times of emergency when every other credit option comes with high interest rates.

Credit unions are not charity organisations, but a type of non-profit lender. They’re cost-effective options that are inclusive, and accessible for people with a wide range of credit scores. They’re also transparent about their terms and conditions and are less likely to contain hidden fees, making them an excellent borrowing option.

4. Guarantor Loans

Do you have a thin credit file or poor credit? Then, a guarantor loan might be a great option to consider.

While guarantor loans come with high interest rates similar to a personal loan or an emergency loan, this type of loan shifts the liability of repayment from you, the borrower, to your guarantor who co-signs your loan. However, if you can make timely loan repayments, your guarantor may not be required to do anything.

Lenders sometimes require guarantors to show their credit reports and furnish proof of house ownership. These are steps lenders take to do their due diligence and ensure your guarantor is capable of making loan repayments if you’re unable to do so. Many consider guarantor loans as the best low-risk credit option for borrowers.

5. Borrowing from Loved Ones

A supportive network of trusted friends and family can make all the difference during your times of need. They offer an excellent support system and can help you navigate a crisis better.

While approaching close family and friends for monetary needs can be awkward and uncomfortable, it’s best to be honest about your financial situation and what you need. This will assure them that you’ve not taken this decision lightly and have given approaching them this considerable thought.

Borrowing from family or loved ones relies on mutual trust and personal dynamics and is less likely to be accompanied by any interest rates. This makes it a cost-effective alternative to emergency loans that can bring you much peace of mind.

However, when you borrow from friends or family, clearly communicate your repayment terms and write them down to prevent potential misunderstandings in the future.

Conclusion

Emergencies can be stressful to navigate if you are short of funds to meet urgent expenses. These types of financial expenses need quick thinking on your feet.

However, you still need to do your due diligence to avoid falling prey to predatory lenders. Emergency loans are an expensive loan option and it’s wise to consider exploring other low-interest options.

We hope the options we’ve given you help you during your time of need and aid in better financial management.