Just as life is unpredictable, that’s also how unforeseen circumstances that require funds can also come our way. And some of these unforeseen circumstances could come as car repair, wedding, or even a medical bill. Emergency loans in Ghana enable some financial organizations to help Ghanaians with funds for such emergencies.
Other types of loans such as guarantor, SME, or even student loans might not be enough for you. However, an emergency cash loan can equally help customers deal with their short-term cash problems. Reading further, you’ll know more about emergency loans in Ghana and how you can get one.
What is an Emergency Loan?
Emergency loan is an unsecured loan you can take out to cover unexpected expenses. And the amount you can borrow varies depending on how much you need to cover your expenses. Most of the time, you can get the emergency fund quickly, with disbursement within a day or two after your lender approves it. Besides that, some lenders can even transfer you the emergency loan on the very day you apply. This is also how you can access quick loans and mobile money loans. Moreso, they do not require collateral because most emergency loans are unsecure. They sometimes call them quick loans.
But some lenders offer secured personal loans that require borrowers to put up assets to borrow money. Such assets include homes, cars, savings accounts, funds and other assets. Also, you can access emergency loans through credit card advances and payday loans as they have their own advantage.
What are types of Emergency Loans in Ghana?
Emergency loans come in different forms here in Ghana. They include:
1. Personal loans
Some lenders offer secured personal loans, which usually require collateral. And this collateral can come as cars, investments, real estate, etc. However, there are some personal loans you can get without collateral.
2. Credit card advances
The interest rates on credit card cash advances are higher than APR on regular purchases, as well as additional fees. Interest accrues when you take money out. Normally there’s nothing like a grace period. This, however, implies that you’ll pay higher interest rates when you get an emergency loan with the credit card advances.
Learn how to get a credit card in Ghana
3. Payday loans
A payday loan is a small, high-interest loan that rarely requires credit checks. But it usually has a fast turnaround time and requires that you pay it back by your next paycheck.
4. Title loans
Title loans are loans taken out against the title to a vehicle, like your car, in exchange for cash. And if you can’t repay the loan, the lender can keep your car.
Uses of emergency loans in Ghana?
In Ghana you can use emergency loans for various purposes. They are:
- You can use emergency loans for utilities. With the emergency loan, you can pay utility bills on time. Thereby, enabling you to maximize the use of your electrical appliances. Staying on top of your bills will prevent a drop in credit scores and keep you from falling behind on expenses.
- An emergency loan can help you cover unexpected medical expenses or expenditures.
- You may need an emergency loan if a loved one passed away and did not have life insurance.
- Often an emergency loan may be the only way to get by until you get paid again if you cannot pay your rent or mortgage.
It’s important to check the terms and limitations of your potential lender before applying for a personal loan. This is because some lenders prohibit the use of emergency loans to pay for post-secondary education in Ghana.
How do I choose an Emergency Loan in Ghana?
When exploring various emergency loan lenders. It is essential to avoid picking the first one that appears when making your research. There is a need to analyze various available options for the best lender by considering:
1. Financing time
Normally, one to two days is the perfect time frame. While some lenders take several days to deposit funds, other lenders can do so the same day.
2. Fees
Find out the exact costs that each lender charges by reviewing the fine print. For instance, origination fees and late payment penalties are common emergency loan costs.
3. Requirements for credit scores
Your credit score affects your interest rate and how much you can borrow from the lender. Most lenders have a credit score threshold, and you’ll need to meet that in order to apply for a loan.
4. Interest rates
You may qualify for the lowest interest rate if you have excellent credit. However, know what lenders charge for credit that is less than perfect. Then compare lenders accordingly for the loan you need.
5. Terms of repayment
Do you want to pay your loan back sooner with larger monthly payments? Or do you need smaller payments so you can pay it off? Emergency loan terms differ by lender, although some require repayment of at least a minimum amount each month. Therefore, if you borrow GH₵500, you could have a loan for up to a few months.
Where can I access an Emergency Loan?
We can arrange an emergency loan through a credit card store or a payday lending company. Also, the best option for funding a personal loan is a traditional unsecured loan. Especially through a credit union, a bank or online lender.
1. Credit Unions
Credit unions offer emergency loans to members who have credit union accounts instead of bank accounts. They are more friendly toward borrowers with fair credit and poor credit.
You may also want to consider other options because some credit unions lend only to their members. Or to those that have been members for a certain amount of time. They also have some criteria you must meet to qualify for their loans. If you don’t meet their criteria or if you seek a higher amount of money. Then you can consider other options for funds.
2. Banks
Brick and mortar institutions like banks may assist you in getting a personal loan. Especially while you have a bank account with them.
Banks usually have different processing methods when compared to other lenders. Most banks, for instance, have higher credit scores or income requirements before you qualify for a personal loan. It could take longer than you think to get funds deposited into your account, so you check the time it typically takes before applying.
3. Online Lenders
Several online lenders offer a wide variety of emergency loans, and most don’t require members with a current account to apply. Many offer the option of pre-qualification so that you can see if you’re eligible for a loan before you actually apply. This way, you can avoid a hard credit check that may hurt your credit.
Many traditional banks also offer online applications and processing if you do not feel comfortable with an online lender. All you need to do is to make sure that it’s a reputable online lender with a secure website and a strong offering.
Note: Each lender has different standards and requirements. Therefore, there is a need to review as many as you can before applying for an emergency loan.
What are the alternatives to Emergency loans in Ghana?
There are other options besides emergency loans for borrowing money fast. You may consider these before applying for an emergency loan:
- Getting rid of your high-interest credit cards.
Merging your credit cards, or applying for a zero percent balance transfer credit card.
- Repaying a medical bill.
Talk to the hospital about setting up a repayment plan that works for you. Some hospitals have interest-free repayment plans, so you can schedule several hospitals to settle your bill if you will pay a portion of it upfront. By doing this, they will collect payments and keep the rest.
- Accessing your home’s equity through a home loan.
They secured these with collateral in your home. HELOC interest rates are typically lower than unsecured loans, while repayment terms are usually long enough to allow you to afford low monthly payments.
Conclusion
When you’re in dire need of funds, you’d normally need your friends and family to help you out. But when it becomes impossible to access the complete funds necessary to see you through your financial debacle from them. Getting a loan becomes the ultimate choice you must make. And speaking of ultimate choice, emergency loan literally tops the chart of the essential loan offers to go for.
The uncertainties of life have taught many people lessons they’ll never forget in their lifetime. Consequently, lenders have created emergency loans to always help people out of some uncertainties that’ll require financial aid. However, always remember to repay any loan you get so that your lender will grant you another loan in the future.