With the current global pandemic and other economic issues in Kenya, living has not been easy. No matter how much you work, toil and expect the unexpected, there is simply no way to know what lies ahead. Escaping from emergencies in a smarter and effective way is through an emergency loan. After all, unplanned and completely unpredictable events must always occur.
An emergency fund in Kenya gives you peace of mind when daily troubles and lack of funds leaves you stressed out. So know this, it is difficult to come up with a fund right away when you need it. Are you still willing to go along with me? If yes, let us explore emergency loans in Kenya and all you need to know.
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What you need to know about Emergency loans
Emergency loans often come as unsecured personal loans, salary advances, payday loans, and credit card cash advances. These forms of loans are gotten quick to solve the said emergencies. It is sent directly to your bank account or your M-Pesa account. Often within a business day or few hours. The fast processing of the loan depends on the lender and the details of the loan application.
To fully understand the lender’s requirements and your options, conduct a quick research. Also read everything throughout the process.
What are Emergency loans?
Emergency loans are loans that cover sudden expenditures. They are unsecured personal loans that you can borrow to solve pressing and unexpected expenses. Relatively they are expenses like unexpected car repairs, home roof repairs, personal needs, etc.
Because emergency loans are unsecured, they require no collateral. However, some lenders offer emergency loans where the borrower has to put up an asset.
Personal emergency loans steps and procedures vary by lender, so all you need to do is to evaluate each of your options. Consider how much you can borrow, the fees, minimum amount, your income and the requirements
How does emergency loan work
An emergency loan is an unsecured personal loan that allows you to get a loan and pay for unexpected expenses immediately. If they approve your loan, it gives you the power to own a fund and solve your immediate problem and pay back the next day or soon enough.
Then instead of submitting a collateral and going through the long process of collecting a loan, you take the quick step. You make simple fixed- rate repayments within a month or more based on your terms.
Personal emergency loans come with low credit interest rates than credit card cash advances.in paying back the fund you collected, do it in a smarter, affordable and better way.
What can you use Emergency loan for
Emergency loans as a type of unsecured personal loans can be used for almost everything. It is pertinent you review the terms of each lender before proceeding to apply. Therefore, emergency loans are used to pay Bill’s ranging from:
- Car repairs: while going through your daily activities, your automobile might need an immediate repair. The tendency being to use it at the most effective time often regarding going to work.
- Unexpected circumstances to see the medics: often the body system changes without permission. The need to see the doctor may arise unexpectedly and if you don’t have cash, an emergency loan is the best option. You can also use the fund collected to pay off accumulated hospital bills or purchase drugs.
- Natural disaster occurrence: natural disasters like flood and wind blowing off home roofs might need an emergency fund to repair it. You can collect the money and sort out disaster occurrences and pay in due time.
- Utility bills: unexpected bills and utility bills can make you go for emergency loans when you don’t have the fun. It can be used to set off immediate bills to avoid embarrassment and issues.
- Machine replacement and food stuffs: replacing a machine for creating more output is important and might require an emergency loan to tidy that up. Also, hunger can not be endured till the end of the month when you receive a salary. It is better if you take up an emergency loan and buy foodstuffs and payoff at the end of the month.
- Rent payment: if your rent is due and you run short of cash, an emergency loan can sort that. To avoid being thrown out of the house, it is better you sort for a better option and better later with an interest.
- Funeral expenses: death does not knock on the door before it comes in. When a loved one passes away without leaving a funeral cost, you may take up the responsibility and go for an emergency loan.
Types of emergency loans
When you need a loan in time of emergency, there are several options out there that you can pick from. The type of loan you go for depends on your credit history. They may also consider your capacity in repaying the loan. The types of emergency loans we have are:
- Personal loans
- Payday loans
- Credit card cash advance
- Title loans and Shylocks loans
Personal loans
Unsecured personal loans is a type of an emergency loan that is rampant in Kenya. Your eligibility and amount are determined using your credit history. Some personal loans also are collected by presenting a collateral like logbook car loans.
Learn more on how to apply for personal loans in Kenya
Payday loans
This is also a form of an emergency loan that has a high interest rate and flow amount. You make repayment on your next payday and require no credit check. Unsecured personal loans are better when compared with payday loans.
Credit card cash advance
This involves borrowing funds through your current credit balance when you have a credit card. The interest rate for this type of emergency loan is also high. Transactions and processing are associated with this type of loan.
Title loan and Shylock loan
Here you need to provide your car or a tangible item, as requested by the lender for funds. When you cannot pay back the loan, the lender keeps the car or sells it off to recover the loan amount.
Check out other types of Loans in Kenya
Where to get an emergency loan
When there are options like credit card cash advance, payday loan and others, there are other options. You can also collect emergency loans from:
- Bank
- Online lenders
- Credit union
Banks
You can get an emergency loan in the bank and have it transferred to your bank account. If you check and find out that you qualify and the process isn’t too long, you can go with the bank.
Online lenders
Different online lenders in Kenya offer emergency loans quick and easy using a loan app. Some show you the pre-qualification on the app to check if you qualify. This option is also better once you are sure they are reputable lenders, have a secure site and legitimate as well.
Credit unions
A credit union can provide emergency loans. They transfer the money to your credit union account. It is a community or women or region based union. Their loan amounts vary, and they are fair to credit scores. Just meet the requirements and find out If they give to their members only or individuals that have covered their probation.
How to choose an emergency loan
When doing your quick research and comparison both online and offline, know what you want. Avoid choosing the first person, each for the best lender by considering:
- Fund arrival time and how soon to get the cash
- The interest rate associated with the loan amount.
- The repayment duration. Know that the emergency loan duration varies with lenders. It is important you go for a longer repayment duration to give you time to gather enough funds.
- Check all other associated fees. Watch out for what lenders charge, especially the transaction fee and late payment penalties.
- Identify the credit score to meet. Your credit history affects your interest rates and the loan amount.
Emergency loan alternatives and alternatives when you have a bad credit
When you have weighed all options and there are many shortcomings. Seek for other alternatives. Often bad credit could be the cause. Look out for other escape route to this. Other options include:
- Seek an advance cash offer from your employer
- Checkout charitable financial organisations
- Talk to a friend, family or neighbors.
Conclusion
You can conquer any situation you find yourself in life that may require funds. Life issues knock on everyone’s door; the financial market has mapped out daily and several options to sort it out. Emergency loans are loans you receive to cover unexpected life issues. We have various types of emergency loan discussed in this article. Know them and select the one you need to go for.
Also, note strategies or alternatives to take when commercial loans fail you. Be smart enough to penetrate the financial market quickly and smoothly to meet up and solve the emergency.