Emergencies happen, and when they do, having the funds to cover the financial aspects can be a problem for many people. Recent studies have shown that nearly 70% of people in America have less than $1,000 in their savings account right now, so if the car breaks down and needs $2,000 in repairs, it’s going to be very difficult to cover the emergency. Yet, it’s not likely they can go without a vehicle long enough to save the extra money needed to cover the repairs. Instead, when emergencies happen and there isn’t enough money to cover them, it may be a good idea to look into personal loans.
When is a Loan Needed?
Short-term personal loans are perfect for times when emergencies happen and there isn’t enough money in savings to cover the unexpected bills. If an appliance like the refrigerator breaks down, it will need to be replaced. If a pipe in the home bursts, the repair can’t wait for the homeowner to save up extra money, so applying for a personal loan may be a good idea. This type of loan can be used for just about any emergency situation where the total bill is a smaller amount, under around $5,000, but more than the person can afford and still pay typical expenses like utilities and groceries.
How Much Money Can be Borrowed?
The amount that can be borrowed for a short-term loan generally is under $5,000. It is suggested that borrowers only accept the amount they need to handle the emergency, as the less they borrow, the faster it will be paid off in full. Loans can start as small as $100, so borrowers can get the amount they need to deal with the emergency, whether it’s an electrical problem in the home, a car that won’t start, or any other issue they might have.
What’s Needed to Apply
There is not much that the borrower will need to apply for a short-term signature loan. They will need to provide proof of their identification, bank information, income information, and other basic information. They will not, however, have to worry about going through a credit check to find out if they’re approved. This type of loan bases the approval on whether the borrower can afford to repay the loan, not what their credit score is. This makes a short-term personal loan perfect for just about anyone, regardless of whether they have a perfect credit score or they’ve had issues with their credit in the past.
What Happens After the Application?
After the application, the borrower will find out if they’re approved and how much money they can borrow. Typically, the approval process only takes a few minutes, so they won’t have to wait days or weeks to find out if they can borrow money. If they are approved, the borrower can opt to pick up the money in person or obtain the funds through direct deposit. It does take one business day for the funds to arrive via direct deposit, but this is the perfect option for those who may not be able to get the money in person. After they’ve received the funds, they can use the money and start repaying the loan.
Using the Money Borrowed
Once the money is received, the borrower can use it however it’s needed. There’s no need to keep a list of how the money was spent as there may be with a bank loan. If the money was needed to buy a new refrigerator, for instance, and the borrower finds one on sale, they can use the leftover money to cover new groceries that will replace the ones that spoiled when the old refrigerator stopped working.
How to Repay the Loan
After the money has been received, it’s a good idea to start thinking about the repayment. Borrowers will receive information on when and how to make the payments. It’s suggested that borrowers create a budget to help with their finances. This way, they can make sure all of their monthly expenses, including the loan payment, are covered before spending any money elsewhere. Borrowers will want to make sure they make the repayments for the loan on time each month and that they pay the loan off in full by the final payment date to avoid any issues.
Sticking with a Budget
A budget is helpful to make sure the loan is repaid properly, but those who are new to budgeting may find that it’s a little hard to stick with it at first. It’s important to remember that budgets should be flexible, but that borrowers should account for all money coming in and all money being spent. Those who have not done a budget before may be surprised at how much they spend on certain things, like eating out, and may find that they can trim some expenses to make it easier to repay the loan.
What to Do Next
After the loan is repaid, it’s a good idea to start putting money aside every month to build a savings account. The monthly payment that went towards the loan can be put into savings at this point instead so there’s no change to the budget but money is being saved. It may take time to build a savings account, and there still may be times when extra money is needed due to the emergency costing more than the amount that has been saved. But, creating and maintaining a budget will help borrowers plan for the unexpected expenses in the future.
If you’ve had an unexpected emergency and don’t have enough money in savings to cover it, there is help available. Take a look at the short-term personal loans available today to learn more about how they work, how easy it is to apply, and how fast you could have the money you need. With the right help, you’ll be able to handle the emergency without any issues, and you won’t have to worry about how you’re going to cover the emergency and your regular monthly bills.
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