The unexpected can happen, so we understand unexpected expenses. This could be a funeral, a wedding, or even a hospital bill. Emergency loans are one way some financial organizations in Ghana help with such emergencies. However, an emergency cash loan helps customers deal with their short-term cash problems. Reading further, you discover the meaning of emergency loans and other necessary information about you need to know.
What is an Emergency Loan?
An emergency loan is an unsecured loan you can take out to cover unexpected expenses. The amount to borrow varies regarding on how much you need to cover costs. Most of the time they are quick, with deposits occurring within a day or two after they approve you for a loan. Some lenders usually fund loans on the very day you apply. They do not require collateral because most emergency loans are unsecure. They sometimes refer them to as 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 pay day loans as they have their own advantage.
Types of Emergency Loans in Ghana
Most emergency loans can come in a few different forms, which include:
- Personal loans
There are many lenders who offer secured personal loans, which usually have collateral, such as the collateral itself, like cars, investments, and real estate. Some personal loans are also available with no collateral, such as business loans.
- 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. Nothing like a grace period. This, however, increases how much you will pay back.
- Payday loans
A payday loan is a small, high-interest loan that rarely requires credit checks, but has a fast turnaround time, usually requiring that you pay it back by your next paycheck.
- Title loans
Title loans are loans taken out against the title to a vehicle, like your car, in exchange for cash. If you don’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, such as:
- You can use emergency cash loans for utilities. Keeping the lights on and making sure your phone stays on is easier with an emergency loan to pay utility bills on time. 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 cover unexpected medical expenses or expenditures at the emergency room.
- You may need an emergency loan if a loved one passed away and did not provide for funeral costs or other end-of-life expenses.
- 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.
- A home equity line of credit or a home equity loan offer better interest rates and terms than home repairs needing immediate attention. Likewise, auto repairs occur at the most inopportune times. If you need a home repair or auto repair and can’t afford to wait too.
Consider checking the terms and limitations of your potential lender before applying for a personal loan. For instance, some lenders prohibit the use of emergency loans to pay for postsecondary 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 shop for the best lender by considering:
1. Financing time
Ideally, 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.
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 you need to meet in order to apply for a loan.
4. Interest rates
You may qualify for the lowest interest rate if you have excellent credit, but keep in mind 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 ₵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. The best option for funding a personal loan is a traditional unsecured loan through a credit union, a bank or online lender.
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 consult other options because some credit unions lend only to members or to those that have been members for a certain amount of time. If you don’t meet those criteria or if you are seeking a higher amount of borrowing, then look at other options. Keep in mind, however, that some credit unions will only lend to their own members. In case you cannot meet those requirements, or if you need to borrow more, there may be other options available to you.
A brick and mortar institution may assist you in obtaining a personal loan while you have a traditional bank account there.
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 or 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 that 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.
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, consolidating 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 will settle your bill if you will pay a portion of it up front. 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.
When you’re really struggling, you can encourage your friends and family to lend you a hand. There are also many nonprofits that can help you out financially, especially emergency loans.
Taking out an emergency loan is never easy, so try to exhaust other options before borrowing money. In times of need, emergency loans can be a less expensive option to payday loans, title loans, and credit card advances. Decide on your best course of action by weighing all the options.