Emergency Loans: The Full Guide

What Is an Emergency Loan?

An emergency loan represents financing that covers emergency cash funding that is unsecured. If you need money now, you can borrow one of the fast money loans online to cover any expenses that crop up unexpectedly. Normally, most emergency loan packages or emergency loans range from $250 to $1,000.

The urgent loans featured online represent either emergency cash loans or an emergency payday loan that can be electronically deposited into your account after 24 to 48 hours. If you apply early enough and have all the necessary documentation, you can have access to the funds in the afternoon. 

Because an emergency loan is usually unsecured, you don’t need to put up collateral, such as a car title to get one. However, some lenders do offer emergency cash loans that are secured through home equity financing or a savings account. 

You may also obtain emergency loans through credit card advances, although it is best to veer away from this sort of practice. If you want to get the best rates, even with bad credit, it is better to check out the installment loans online that cover emergency or review the unemployment loans that can rescue you financially at a lower interest rate.

How Emergency Loans May Be Used

You also need to consider the different reasons for taking out emergency loan packages. The following list gives you common reasons for reviewing emergency loan products online.

Mortgage and Rent Payments 

If your rent or mortgage payment is due and you don’t have enough money to make the payment, an emergency loan can tide you over until your next payday. In this case, you may want to opt for an emergency payday loan. 

While the interest is significantly higher, the loan can be obtained easily and the financing is designed for payoff in one or two installments. If used correctly, you can get the cash you need now and pay off the “advance” quickly.

Utilities

If you don’t want to lose your source of communications or want to keep your house lighted at night, you can look at fast money loans online that you can use to pay your utility payments on time. It is important to pay your utilities on time, as missing a payment can reduce your credit score.

Car and Home Repairs

While a home equity line of credit (HELOC) may offer a lower interest rate, some home repairs cannot wait. Also, auto breakdowns seem to occur at inopportune times. Therefore, fast money loans provide solutions – solutions that give you the ability to cover your costs fast.

Types of Emergency Loan Products

Emergency payday loan products

An emergency payday loan represents a loan that has a low amount and high-interest rate. The financing normally does not require a credit check and has a fast approval time. Loans typically range from $100 to $500 and the APRs can be high= (on average, around 400%). The rate of the loan is annualized and depends on where you live. Different provinces have established different payday rates for payday loans in Canada.

Car title loans

 A car title loan is designed so you use the title of your paid-off vehicle as collateral for the loan. If you don’t pay off the emergency loan, the lender can seize your car in lieu of the cash.

How to Select an Emergency Loan

When exploring emergency loan Canada funding options, consider the following:

What is the Funding Time?

Find out how soon you can get the money electronically deposited into your account.

What is the Interest Rate?

Whether you have good credit or bad credit, you should find a loan rate that you know you can manage. Don’t choose the first lender that approves you for a loan. It pays to make comparisons, even if you need money fast. You don’t want to assume a loan whose interest rate turns out to be problematic. 

Emergency Loans and Bad Credit

While an excellent credit score will get you the lowest available interest rate, you should also consider what a lender charges for emergency loans for bad credit borrowers. If you have less-than-stellar credit, review the interest rates offered by credit lenders and figure out how much you’d pay for each loan based on your current credit score.

What Are the Terms for Repayment?

When considering repayment, think about how you want to pay off the loan. Would you rather take on smaller payments over longer-term or larger payments over a shorter term? Usually, emergency personal loans cover payments of one to three years, and installments are paid monthly. If you borrow an extremely low amount, such as $500, the lender might only give you several months to pay the amount back.

What Is the Credit Score Requirement?

Most direct lenders of emergency loans have a credit score threshold you must meet to apply for the financing. In this case, you can usually apply for a loan with a minimum credit score of 600. In some cases, you can get a loan even if you previously filed for bankruptcy. Your credit score will affect how much money you can borrow and the interest rate.

What Are the Loan’s Fees?

Common fees included for unemployment loans or emergency loans in Canada include origination fees and prepayment fees. If an origination fee is assessed, it normally is taken out of the loan proceeds. Therefore, if you ask for $1,000 and the origination fee is $100, or 10%, you will receive $900. Ideally, you should choose among loans in Canada that do not assess a prepayment penalty for paying off the loan amount early.

Where to Get an Emergency Loan

You can get funded by applying for fast money loans through a bank, credit union, or a loan agency online. You can also go directly to a payday loan lender, if you so choose, at a brick and mortar location, or on the Internet.

If you go through a bank or credit union, the processing time normally takes longer and you need a credit score that is good to excellent. You have the best opportunity to get approved if you choose to go through one of the direct lenders that offer emergency loans online. 

Some lenders specifically offer loans for unemployed people or may provide loans for unemployed people with bad credit scores who need cash fast. Other lenders feature easy money loans for debt consolidation or urgent loans that cover unexpected home repairs or vehicle breakdowns. 

If you go through an online lender, make sure the loan agency offers prequalification to avoid a hard credit check, which lowers your credit score. Maybe you are not sure about taking out an emergency loan from a non-traditional lender. If so, you can also obtain loans online through a bank or credit union. Regardless of the lending source, check out the lender’s credentials and reputation online.

How to Apply for An Emergency Loan

To apply for an emergency loan in Canada, you should gather the following information and documents and have them available when applying for financing.

• Your S.I.N. card and a form of identification, such as your driver’s license or passport. This information will be used to ensure you meet the residency and age requirements for getting an emergency loan. You should be at least 18 years old to apply.
• Your contact information, including name and address, email contact, and phone number.
• Proof of income in the form of your two most recent pay stubs or a current income statement.
• The name and address and contact information for your employer.

Alternatives to Getting an Emergency Loan

While you can get an emergency loan, even with bad credit, in Canada, you can also consider emergency loan alternatives, such as the following:

Financing for Home Repairs

To cover home repairs, you might tap into the equity in your home through a home equity line of credit (HELOC) or a home equity loan. The interest rate is lower because this type of loan is secured. However, you can also lose your home if you cannot meet the payments.

Asking Family Members and Friends

If you really need money fast, you might consider asking for a loan from a family member or friend. 

Credit Card Advances

You might consider taking out a credit card advance. If you have a credit card, you can borrow cash from your available balance. However, advances for credit cards carry higher APRs than what is assessed for purchases. Plus, you can expect to pay fees on top of the interest rate. 

These fees may include charges for processing and transactions. The interest on a credit card advance begins to accrue the minute you take the money off your card. You don’t have any grace period, which increases the payback amount.

Pawn Shop Loans

If you have an item you can pawn, you might be able to get a pawn shop loan to cover an emergency expense. This loan is fairly easy to get, as long as you have something the pawn shop can sell if you cannot pay the loan back. Your credit will not be checked and you can get the money you need as soon as you make the transaction. Don’t give anything up that means something to you, as you might not be able to get it back.

Conclusion

If you need to borrow money fast, make sure you check out the lender before committing. You should compare the rates and terms of several lenders before you sign a loan agreement. Whether you have bad credit or good credit, you need to choose a financing arrangement that meets with your budget and ability to pay the loan back.