How to Get An Unsecured Loan For Unexpected Expenses

There are many kinds of loans. Here's a quick guide to your options.

By - Sep 29th, 2021 02:19 pm
Photo by Ketut Subiyanto from Pexels

Photo by Ketut Subiyanto from Pexels

If you’re currently in a situation where you have to cover an unexpected expense, obtaining the money you need right away isn’t an easy job.

Having an emergency fund can be a great help in this kind of situation. However, most Americans don’t have extra cash to save for this purpose, with many simply trying to make ends meet. Saving for a rainy day is just impossible for them.

Fortunately, there are several financing options like bank and personal loans that people can turn to if they need emergency money. But not everyone can apply for them, especially people with poor credit scores.

Many online lenders, such as CreditNinja, are well aware of the problem, so they provide alternate solutions that are affordable to all. CreditNinja opinion on credit unions and banks is fair and informative. However, for individuals who don’t fit the borrowing criteria for either, unsecured personal loans are a good option.

Unsecured Personal Loans: What Are They?

Unsecured loans are sometimes called emergency loans or quick cash loans. They are often used to cover the costs of unexpected expenses. The loan amount will depend on how much money you need to cover the unexpected cost.

However, emergency loans typically offer small loan amounts — ranging from $250 to about $1,000. They are usually fast, and deposits may happen within a day or two after your loan application is approved.

Since this type of loan is unsecured, you don’t need to put up collateral, such as your car or home. However, some lenders might require you to pledge one. So, it’s best to research thoroughly before taking out the loan.

It’s also important to know that unsecured loans used to pay off unexpected expenses tend to vary by lender. It means that the loan standards, requirements and application process may vary. Also, when comparing unsecured loans, it’s best to know how much you can borrow and the minimum credit score, fees, income requirements, etc.

Three Kinds Of Unsecured Loans

Here are some of the common types of unsecured loans that can help you pay off your unexpected expenses:

Personal Loans

Unsecured personal loans use your credit score and credit history to determine your eligibility, loan interest rate, and the loan amount you can borrow. Those with a high credit score get the best loan deals. Those with a low credit score may end up with a loan offer that comes with a high-interest rate and a small loan amount.

Payday Loans

If you’re planning only to borrow a small amount, a payday loan might be best for you. This type of loan doesn’t require any credit check, so you don’t have to worry about poor credit. However,  these lenders often charge high-interest rates.

Credit Card Advances

If you currently have a credit card, you can choose to borrow some cash to cover your unexpected expenses through your available credit balance. The interest rate for a credit card advance isn’t the same as the APR for your regular purchases.

Extra Tips For Paying Your Unexpected Expenses

  • Keep your financial records accessible and organized. If you have them ready in place, it will be easier to apply for any loan and get the money you need.
  • Consider borrowing from credit unions. They can offer low-interest loans.
  • Try out online lending platforms. Online lenders usually process your loan fast, within a day or two after the loan approval.
  • Check out your prequalification offers. Prequalifying for a loan is a great way to gauge your chances of getting your loan application approved. It’s also the best way to compare interest rates from different lenders.
  • Have a financial plan. Since you can’t plan for every emergency, it’s best to save up money for an emergency fund to ensure you’ll have the extra money in your account if an unexpected expense arises.

Comparing Loan Offers

It’s best to get a loan that fits your needs and isn’t heavy on your finances. Comparing loan options can help you find the best one for your needs. As mentioned above, prequalifying for a loan is an excellent way to do your research.

Several lenders allow you to apply for prequalification when you provide basic details about your finances and personal information. Prequalifying helps you get a glimpse of your potential loan rates and terms. This method typically doesn’t require a hard inquiry on your credit.

To Sum It Up

It isn’t easy finding cash right away to cover unexpected expenses. However, there are several ways you can do so. Taking out an unsecured loan can offer you the fast cash you have been looking for; you just need to find the best option for you.

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