If you or your family is in a financial emergency, personal loans may be the thing to pull you out. In this article we describe some financial emergencies and if a personal loan is a good solution.
How to Avoid Financial Emergencies
Before we dive in, it’s important to touch on how you can avoid financial emergencies in the first place. The best thing to do is to build an emergency fund of three to six months worth of expenses.
This way if you lose your job or have some other emergency, you’ve got the funds necessary to make it through without a problem.
This is the first step to financial freedom. Having an emergency fund helps you avoid getting into debt when problems come up, it helps you pay for things you didn’t budget for, and it gives you peace of mind as you go through life.
After all, the only thing you can be sure about in life is that surprises happen. Think ahead and prepare yourself to meet those surprises and make it through them.
If you don’t have an emergency fund, then this article is for you. Here are some emergencies that personal loans might help with.
Emergencies a Personal Loan Can Help With
The short answer is that personal loans are good for covering the cost of surprises. If you can anticipate a big expense coming up, save for it so you can avoid unnecessary debt. That said, here are some specific scenarios in which a personal loan could come in handy.
Most of the time, you can’t anticipate medical emergencies, and they can be expensive. Having health insurance is definitely a must. Insurance will reduce your medical bill, but that still leaves you with your out of pocket expenses. A personal loan will give you time to pay these bills over time and could save you financially.
Just remember that a personal loan won’t do you any good if you don’t have a solid plan to pay it off. Lenders can’t afford to lend money for free. When they lend money, it’s a risk for them. So they have to charge interest to make the risk worth it.
You Have Bad Credit
Using a credit card is often people’s first choice when it comes to borrowing money. The problem is that this isn’t an option for everyone. You may have bad credit, no credit card, or a credit limit that’s too low for the emergency you’re in.
Some lenders don’t require a FICO credit score to approve personal loans. This could be the perfect solution for your emergency personal loan if you have bad credit. Just always make your payments on time to avoid putting yourself in an even worse financial situation.
First off, car insurance is important. You could be the safest driver in the world, but not everybody is, so protect yourself by having adequate car insurance.
If you get in a car wreck or have any other car troubles, and insurance isn’t going to pay for repairs, you have a couple of options. Your first option is to find some other mode of transportation. Look into public transportation or even a bicycle if it will keep you out of debt until you can afford to fix your car.
If your work requires a long commute and public transportation isn’t an option, a personal loan could be the answer. Just be sure to pay it off responsibly.
If your car is totaled and you have to buy a new one, buy one within your means. Find a used car that will do the trick as opposed to the latest and greatest car the world has to offer.
There You Have It
Hopefully, none of these emergencies will find you unprepared, but if they do, know that there’s a way out. Carefully planned personal loans can be a lifesaver when you need it.