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Emergencies can happen at any time in your life.
However, it seems like they always occur when you have the least resources available to deal with them. If you’ve ever dealt with things like a problem with your roof, a broken-down car or something similar in the past, you’ll know that these issues almost always happen at the most inconvenient moments.
To make matters worse, the lending options that have been traditionally available to consumers aren’t exactly appropriate for dealing with all circumstances. For instance, while a guaranteed payday loan might be great when you need a little extra money to work on your new kitchen design, it’s not going to give you the short-term boost you need when your motor breaks down.
The good news is that the loan industry throughout the United States is changing. Today’s loan providers are beginning to consider alternative options for people who need to borrow money quickly, without the hassle of a conventional cash advance.
Here, we’re going to tell you everything you need to know about emergency loans, and how they work.
There are many different kinds of loan available in today’s financial world. Some loans are designed specifically for things like buying a new home (a mortgage) or investing in a car (vehicle finance). However, most of these lending solutions are kinds of installment loans.
This basically means that you borrow some money from a bank or conventional lender and agree to pay back what you owe over an extended period of time. There’s nothing wrong with this process, except it does mean that you need to jump through more hoops to borrow money because taking out a loan often constitutes engaging in a long-term relationship with a bank.
An emergency loan approaches things a little differently. Otherwise known as short-term loans or payday loans, these lending opportunities allow you to borrow money quickly, and pay it back just as fast. Rather than having to worry about making repayments for the next five years on something simple like a new washing machine, an emergency loan gets you back on track fast.
For a while, this kind of lending wasn’t easy to come across in the United States. Lack of regulation and guidelines meant that some companies started to give payday lending a bad name. However, things have changed since then. New practices have been implemented to ensure that payday lending can be safer for everyone. The result is that now 27 states in America offer weekend Payday loans, and another 9 offer a kind of short-term lending.
Emergency loans are designed for emergencies.
Unlike personal loans, which you can use for everything from wedding expenses to vacations with your family, emergency loans are specifically intended for those short-term instances when you need to borrow money fast. There are other ways to lend if you want to spread the cost of something out long-term.
Although the idea behind an emergency loan is that you’ll only use it when you absolutely have to, it’s up to you to determine what you think is an emergency. For some people it might be that they need to fix their car quickly. While they could wait till the end of the month to get the repairs, that would mean taking time away from work, which would cost more money than the loan.
Other people might choose to take out an emergency loan to deal with a crack in their roofing. Although the problem might not be too big to begin with, if storms are brewing, a small crack could quickly change into a huge flood if not dealt with quickly.
Usually, you won’t be asked what you want to borrow your money for when you fill out an application for a payday loan. However, you will need to think carefully about how much you need to borrow. Different loan companies have different caps on how much they can lend short-term.
Some lenders will also advise you to think carefully about using emergency loans for frivolous spending, because these lending options can be expensive when used incorrectly.
The best time to use a payday loan is when you need to borrow money fast, and you can’t afford to wait. If you need a small amount of money, usually less than a few thousand dollars, and you’re happy to pay back what you owe within the next month, then you’ll be well-suited to a Payday Loan.
The process of applying for, getting, and repaying an emergency loan is a little different to what you might be used to from other lending products. For instance, most lending companies for payday loans near me are located online, without a physical branch. Since you don’t need to sit through a meeting with a professional when taking out a payday loan, there’s no need for a brick and mortar location.
Launching a lending institution online allows payday companies to save money on overheads that they can pass onto you. It also means that the application process for your loan can take place entirely online too. This can be a lot more convenient than filling forms out in person.
Usually, you’ll be able to log into a website, give some basic information on how much you want to borrow, and get a response within a matter of hours. Some of the information that you might need to complete your application include:
You’ll also need to prove that you’re a legal adult with a bank account in your state before you can progress with your payday loan. From there, your emergency lender will check your credit score, just like any other lender.
The good news is that even if you don’t have the best credit rating, that doesn’t necessarily mean that you’re going to miss out on the chance of a loan. Most payday lenders will consider things like how much you earn each month as being more important than your credit history. Since you’re only borrowing for a small amount of time, your lender is taking on less risk than they would be with a standard installment loan.
Once you’ve completed your loan application, you should find out within a couple of hours whether you’ve successfully been offered your loan. If you do get the loan that you want, then your lender will ask you to set up a strategy for repayment straight away.
Here’s the major area where emergency loans can differ from other kinds of lending. Rather than paying everything back in chunks, you repay the entire cost of your loan in one go. This usually means filling out a post-dated check with your lender that they can cash when your next payday arrives.
You’ll get a quote for the full price of a loan that you can decide whether you want to agree to. If you go ahead with the loan, some companies will be able to deliver the money to you within a matter of hours, rather than days. This makes emergency lending excellent for those who want to save time.
The good thing about paying everything off at once is that you don’t need to worry about changing your budget for the next few months when you’re dealing with a long-term loan. You can also take the stress and anxiety of debt off your mind too. Instead of worrying about long-term repayments, you’ll only have one fee to deal with.
Additionally, many people find that taking out payday loans and repaying them on time can help them to improve their credit rating too. It’s a great way to show the credit agencies that you can repay your loans according to a strict timeline.
Remember, if you’re concerned that you might have to roll the cost of your loan over by another month, you’ll need to check that your loan provider offers this service in advance. You can find information like this on the lender’s website, along with details about the kind of customer service solutions that they can provide.
If you’re struggling with an emergency situation that needs financial support immediately, an emergency loan could be the perfect solution. With this kind of lending, you can get the money that you need fast, and get out of debt as quickly as possible.
What’s more, as the number of payday lenders in the US market continues to grow, you should find that you have a wide selection of potential companies to choose from when you’re looking for a company that can give you the best deals and rates.
Only you can decide if you should get a payday loan. However, if you decide to go ahead, make sure that you do your research.