There has come a point in each of our lives where we have gone through the difficult process of dealing with a financial emergency. When you are faced with such a situation, the ideal approach will be to seek a loan. However, if it happens during a financial crisis, then it becomes exceedingly difficult to secure that loan.
Seeing as you will be caught in an emergency, it is unlikely you will be able to spare the time needed to find other viable options. For this reason, lenders have created emergency loans, which can ensure you receive a smoothly secured loan. Note that emergency loans usually have high-interest rates. In return, emergency loans offer optimal convenience. That being said, here is how you can get an emergency loan, even when there is a financial crisis going on.
Improve Chances of Qualification
Typically, if you are looking to improve your chances of qualifying, you should look to reduce the level of risk you present. In order to successfully qualify for a loan, you will first need to understand your current financial status. You should check your credit score and report, as well as your income and assets. Always look to improve your credit score, as it plays a major role in securing you a loan. Each lender will have their own requirements and ratings that are separate from that of their competitors.
Best Loans For Emergencies
One of the first things you should do is learn about the best loans to get when in a financial emergency. You can find fast funding through several types of loans, each of which carries its own unique pros and cons. Here they are:
Credit Card
Receiving cash advances on your credit card is possibly the fastest way of acquiring an emergency loan. Cash advances share many of the same characteristics as short-term loans. If you are a credit card holder then you do not need to apply for loans or anything as such, instead, you receive immediate access to your credit funds. The loan experts over from GreenStarCash explain how cash advances can help you out of tight situations, which is done by giving you access to emergency funds whenever you need it. However, it is important to know that cash advances have a higher interest rate in comparison to purchases.
Payday Loans
Payday loans are very commonly sought by those stuck in financial emergencies. You may take out a payday loan against your future income, but it must be paid back by the time you collect your next paycheck. You can expect to get approval for this type of loan in no more than 24 hours. In addition, you might care to learn that payday loan lenders do not check your credit score.
Pawnshop Loans
If you are hoping to receive immediate approval for a loan, no lending institution compares to how fast pawnshop loans give lending decisions. You are given a short-term loan, while the pawnshop holds onto an item of yours as collateral. In the event that you cannot repay the loan, your asset would then be forfeited to the pawnshop’s possession.
How a Financial Crisis Can Affect Your Ability to Get a Loan
One of the first thing’s that happens during a recession is that unemployment may rise. Naturally, this means many people will default on their loans since they will not be receiving their monthly paychecks.
As a result, lenders will take a harder look at your reports and credit score. The following information is what lenders look for:
Credit Score & Report
Both your credit score and your report are heavily scrutinized by lenders when the economy is tight. Your credit history says a lot about how you manage debts and credits. To improve your credit score, look to make payments of time. If you have ever defaulted on a loan, or declared bankruptcy, either will put you at an inferior score. Your credit score and report are both highly indicative of your current debts, which may affect how favorable you seem to lenders.
Income & Assets
How much you earn is arguably the deciding factor, when it comes to getting a loan, as lenders are always more confident to lend people with higher incomes. Assets also determine whether or not you get an approval, for similar reasons to income, in that they instill confidence in lenders.
All in all, although getting an emergency loan during a financial crisis can be a hassle, it is not impossible, and certainly not difficult for borrowers with a good financial reputation. Simply, always look to strengthen your credit score, which you can do by receiving cash advance on your credit card. And remember, there are various types of emergency loans to choose from, so do not despair if you get a rejection or two.
