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Life is full of unexpected twists and turns; medical emergencies, car repairs, home renovations, or repairs. It is important to be as financially prepared as you can for these circumstances when they arise, but it isn't always possible. Fortunately, emergency loans are available for when those unexpected expenses come up. An emergency loan is any loan or amount of money that you can borrow on short notice. To cover unexpected expenses, there are various options available, including personal loans, payday loans, credit card cash advances, title loans, or simply asking a friend or family member to provide you with a loan. Maybe you've found yourself in this position: "I need an emergency loan, today!" You may need money immediately, or at least as quickly as possible. Personal loans are one of the most reliable and sure-fire ways to get money quickly and easily. Depending on the lending company, you can receive same-day approval and funding for your emergency loan. It is important to note that personal loan lenders will conduct a credit check, and lower rates are only available to those with good credit scores. But there are other options for those with bad credit scores in the form of payday loans. Payday loans are a good option for those with bad credit scores, generally providing up to $500 almost immediately. However, payday loans often come with high interest rates and must be paid back in two to four weeks, or before your next payday. On the other hand, personal loan lenders conduct credit checks and typically require a good credit score to qualify. A better credit score means that you could qualify for a larger loan, if needed, and receive lower interest rates. Applying for a personal loan is also a safer process with no required collateral, although that varies with each lender. Therefore, it is important to do research on multiple personal loan companies before choosing one for your emergency loan. Luckily, we’ve done some of that research for you already. Based on fees, services, comparison, and customer reviews, we’ve created a list of the top five personal loan companies for emergency loans. 1. Best Egg Minimum credit score: 600 APR range: 5.99%–29.99% Great customer reviews With an instant decision process, you could receive money in as little as one business day if you are approved and submit the required documentation. However, it is important to note that Best Egg has a loan origination fee between 0.99 percent and 5.99 percent of the total loan amount. This fee is taken directly from the loan before being added to a bank account. Customers generally have nothing but good things to say about working with Best Egg for their personal loans, highlighting the speedy approval and funding process, as well as great customer service. Read Full ReviewVisit Site Best Egg Customer Review: Gordon from Ocean Shores, Washington "Quicker and the interest rate is cheaper than payday or other personal loans. I needed emergency dental work and could not be without my two front teeth...thank you Best Egg." 2. FreedomPlus Minimum credit score: 620 APR range: 7.99%–29.99% Good customer reviews With a lower minimum credit score requirement than most other lenders in the industry, FreedomPlus offers same-day lending decisions on personal loans ranging from $7,500–$40,000; a great option if you have some unexpected expenses that come up. FreedomPlus doesn’t have any application fees or prepayment penalty fees, but there is an origination fee of 0 percent to 4.99 percent on personal loans. This fee is lower than other personal loan lenders, but there are some companies in the industry that don’t have an origination fee. If you have any questions as you’re applying for an emergency personal loan, FreedomPlus will quickly connect you with a customer service representative or loan consultant that will help answer your questions and make the loan process as simple as possible. Here’s what customers have to say about their experience with FreedomPlus: Read Full ReviewVisit Site FreedomPlus Customer Review: Nancy Jones from Nenana, Alaska "I felt very comfortable working with FreedomPlus. They were very responsive and helpful. They let me know step by step what I needed to do to help them get me approved for the emergency funding I needed." 3. Upstart Minimum credit score: 620 APR range: 8.94%–35.99% Good customer reviews Upstart is a great option for those with little to no credit history, such as young professionals and recent college graduates, a group that might have a harder time making ends meet when unexpected expenses arise. But, even if you aren’t a recent college graduate, Upstart won’t just look at your credit history for approval, but will take things such as your job history and income into consideration, making it easier for you to get an emergency loan. Although APR rates are higher with Upstart than most other lenders in the industry, it does have low fees, a competitive maximum loan repayment term (five years), and a quick application process that can get money in your pocket as fast as one day after approval. Many of Upstart’s customer reviews are positive, speaking to its quick and easy approval process. However, there are many negative reviews as well, stating that the company makes a borrower jump through a lot of hoops, and customer service was difficult to work with. Read Full ReviewVisit Site Upstart Customer Review: Jo Temp from Belton, South Carolina "The quickest loan I have ever received, money was deposited in 2 days, unbelievable wow!" 4. OneMain Financial Minimum credit score: varies APR range: 18.00%–35.99% OK customer reviews OneMain Financial has been around for a very long time (108 years, to be exact), and knows its way around personal loans. Loans from $1,500–$20,000 are available with a variety of term lengths. If you apply for a personal loan with OneMain Financial by noon on a business day, you could receive funds as early as that same day. In addition, loans have fixed rates and fixed payments, so you can feel confident and secure in your repayment, because your rates and monthly payments will not increase. OneMain Financial doesn’t have a minimum credit score requirement; therefore, if you have a poor credit score, you could be approved for an emergency personal loan. Customers are generally satisfied with service through OneMainFinancial, highlighting a simple loan application process and quick payment. Read Full ReviewVisit Site OneMain Financial Customer Review: Jess Patton "When I had a medical emergency and could not work, I got a loan from them, using my old car as collateral. It was fast and easy, no hassle, and in two days it was deposited into my account. I have auto payments pulled from my account twice a month, on the days I chose, and I never have to think about it. It was perfect, and easy! And a life saver!" 5. LightStream Minimum credit score: 680 APR range: 2.49%–19.99% Negative customer reviews If you are in need of a large loan, fast, LightStream is a good option, offering personal loans from $5,000–$100,000. Because it offers a much higher maximum loan amount than most other lenders, LightStream requires a higher credit score to qualify. However, cosigners and joint applications are accepted, which would increase your chances of qualifying if you have a poor credit score. However, if you need money as quickly as possible, finding and working with a cosigner may not be in your best interest. LightStream offers same-day funding after your application is approved. This is great, especially for funding emergencies, and there are no origination fees or prepayment penalty fees. It is important to note that if you receive a loan through LightStream, you must use it for the reason stated in your application. The majority of LightStream customer reviews are negative, with many saying that the guidelines are difficult to follow and that loan acceptance rates are very low, even with an excellent credit score. LightStream may be one of the fastest options for an emergency loan, but these are also important things to consider. Read Full ReviewVisit Site LightStream Customer Review: Douglas Jennings "Very very impressed. Went very smooth and fast response to approval. I will tell others. Repeat customer right here for sure. Thanks again LightStream." Other types of emergency loans Credit card cash advances are the easiest and most immediate way to get money for an emergency. Borrowers simply stop at the bank or at an ATM and withdraw cash from their credit card, which must be paid back. However, interest begins to accrue immediately, increasing the amount of money owed over time. Specific to car repairs and emergencies, title loans are short-term secured loans, requiring borrowers to put up their car title as collateral. This is a risk because borrowers could lose the title to their cars if unable to pay off the loan. Home equity loans can provide more funds than a personal loan because the loan amount is based on the value of your house relative to your mortgage balance. Depending on your circumstances, the ability to secure a larger loan might be the best option, but it is important to keep in mind that you risk foreclosure on your home if you’re unable to pay the loan back, which could create greater financial hardship for you overall. If you have an emergency that needs an immediate financial solution, turning to your friends and/or family members for a loan may be a good option. Because they are close to you and may know the situation you are facing they could be sympathetic and willing to front some money with little to no interest. Be patient and do your homework Make sure you do some research before jumping into any type of loan or cash advance options. You don’t want to create greater financial hardship for yourself in an attempt to pay for the emergency that has come up in your life. Securing funding in an emergency can be stressful, and you may feel a need to rush. However, if possible, take some time to slow down and weigh the options available to you. Various personal loan lenders can approve and provide funding quickly, but not all lenders are equal in what they offer. Another option might be better for you in the long run. Top Personal Loan Companies Learn more about personal loans by looking at the top-rated companies and their offerings, and verified customer reqviews. Learn More
Did you know that six out of ten households face some kind of unexpected financial emergency each year? Clearly, you can never be too prepared for an emergency; especially when it comes to your finances. This video goes over four ways you can start preparing for a financial emergency: Establish an emergency fund Safeguard critical documents Consult with a financial counselor or coach Review your insurance coverage Although these steps can help you get started with financial emergency preparation, you should also take your personal financial and life situation into account and do what is best for you. Overall, getting your financial situation in order can take time, but it will prove to be worthwhile when you or a family member is faced with a financially taxing emergency. For more financial tips, check out these article for answers to common personal finance questions: "Should I Get a Credit Card or a Personal Loan?" "What if I Miss a Payment on my Personal Loan?" "9 Myths about Credit Card Debt"
34.3 million. That's the number of U.S. consumers with a personal loan at the end of 2018, according to Experian. According to the same Experian study, there are 36.8 million outstanding personal loan accounts in the United States. "Personal loans are one of the easiest and most efficient ways to get cash in your pockets quickly and responsibly," says Mariel Arraiza, Managing Director, Eloan.com. Many people get this type of loan to help consolidate other higher-interest debts although personal finance experts differ when deciding if this strategy is the best way to start on the road to being debt-free. While personal loans are a safer, more responsible option than payday loans or playing the lotto to solve your debt problems, it seems like we need to work on being responsible with them after getting approved and getting the money. With a goal to make your current personal loan your last, we asked personal finance experts for strategies to help achieve that end. Here's what they said. 1. Budget, budget, budget When it comes to financial advice. Joe Toms, president of FreedomPlus has one word for us: "Budget." "Many people cringe at the word," says Toms, "but it is the number one way to avoid getting in [a cycle of debt, and to get out of debt for good." Budget before applying To utilize your loan wisely, Arraiza suggests, "First and foremost, you need to know what you can afford to pay on a month-by-month basis. If you don't already have a monthly budget, create one before you begin applying for loans. This will let you know how much cash you have leftover each month to comfortably repay a personal loan." Budget around your goals "It's important to start by setting goals – and if you're in a relationship and/or have a family, to do so with your spouse and family members," advises Toms. "One goal might be to get out of debt, but other goals might be things like having time to train for a 10K, saving for retirement or taking a vacation. Write down the goals and build the budget around the goals." 2. Consider multiple loan offers "When determining whether a personal loan makes sense for your financial situation," Lauren Anastasio, CFP and Financial Planner at SoFi, has some advice: "you should consider the upfront costs associated (if any) and whether the fixed monthly payment is something you can afford." Research your options "Once you know how much you can afford to pay on a personal loan each month, the next best piece of advice is to take your time," counsels Arraiza. "Unless you're in a rush to get a loan, there's no reason to rush a financial decision. Do plenty of research and planning, and compare multiple providers against one another." Shop around "Remember that you can shop around for the most convenient terms without affecting your credit score, says Arraiza. "Checking your rates is a soft pull and unless you formally submit an application the prequalification normally will not show on your credit profile…" Work on your credit score "If you have a low credit score," she adds, "you can also use this time to work on raising your score, so that you can get the best rates possible. While it may be tempting, don't jump on the first loan that you are approved for. Hold out for the one that will benefit you and your financial situation the most.” 3. Evaluate spending behaviors "The only way to make this personal loan the last one you have to get to climb out of debt is to make changes in how you spend your money," warns Deacon Hayes, founder of Well Kept Wallet. "Some of those changes may be hard to make, but it could be the only way to get real results and stay out of debt for good." Commit to change Changing behaviors is hard. However, in this case, it is a key component to avoiding debt. Just listen to this story from Anastasio: "I frequently speak to SoFi members who are struggling with debt and are looking to take out a second or third personal loan because they failed to change their behavior when they consolidated their debt onto their first personal loan. It's hard to resist the feeling that comes with watching your card balances go down to zero. Time and time again, I hear from borrowers about their feelings of euphoria when they use the loan to pay off their credit cards and then they start acting like they're completely debt-free." Becoming debt-free isn't just a one-step process. Even if you have consolidated your debts into one personal loan, it isn't gone. The debt still exists. AND, you still have to pay it. Here are a few ideas how to help adjust your perspective and shift your paradigm so that you can keep your debts in perspective and manage them accordingly Track all spending "Once you have a budget, with the personal loan payments included," Toms recommends that you "start tracking all spending every day. It can be surprising to see how much you spend, and on what. Writing it down – just as writing down everything you eat when you are watching your weight – opens your eyes to your real spending patterns, and helps you avoid getting back into debt." Act like you are still paying off credit card debt "Anyone using a personal loan to pay off debt should implement the same behaviors recommended when paying off high-interest credit cards (e.g. stop using cards, rely on cash and debit card, reduce spending until debt is gone)," advises Anastasio. Denise Nostrom, Owner of Diversified Financial Solutions agrees with this mindset. She says, "Taking a personal loan can be a positive experience to eliminate your debt, but you must have a plan to increase your odds of success. You should consider writing down all the payments you make to your current debt and try to pay this amount to the new personal loan. The actual payments to the personal loan may be less due to a lower interest rate, but paying extra to this loan will get you out of debt much quicker." Keep your debt in perspective and follow this strategy from Anastasio: "It's very important to remember that just because you might not have a number of different debts scattered across multiple banks with a bunch of different monthly payments doesn't mean that you're any less in debt than you were previously. You need to work towards paying your debt off with the same amount of discipline as if you were still being charged a 27 percent APR on a credit card." Use credit cards wisely "While a personal loan is easier to manage and the balance cannot go up," says Anastasio, "those who found themselves in credit card debt due to bad spending habits should be careful not to find themselves racking credit card debt back up." As Nostrom puts it, "The key to keeping out of debt is not using your credit cards." However, she points out that "This is unfortunately not so realistic, so you can use your credit cards, but make sure the purchases you make can be paid off each month. You can become debt-free if you are committed to doing it and have a plan to tackle it." 4. Dominate your payments "Personal loans come with a set payment schedule," states Toms. "Most have terms of 36 to 60 months (some, like FreedomPlus, offer 24-month terms, too). The strict schedule keeps people on track to eliminate the debt in a timely way; there is no option to just make minimum payments and be paying back the debt for years and years (as is the case with credit cards)." So, if your budget has been set up to your advantage, this pre-set, defined schedule should do some of the heavy lifting for you. Make all payments on-time "Once you select the best term and your loan provider, please remember to make your payments on time until the last one," urges Arraiza. "Your payment pattern is a great contributor to build your credit score." With an improved credit score, you will likely be eligible for better loan rates down the road, instead of massive credit card APRs that got you here in the first place. Plan payments realistically "Often a borrower becomes too aggressive with their repayment when transitioning their debt to a personal loan," shares Anastasio. Due to this, consumers "can find themselves without enough money to get them through the month and are inevitably forced to charge expenses to their credit card. This will keep the debt cycle going indefinitely. Be realistic about what you can afford for a monthly payment and stick to the term that fits your cash flow." Consider alternative payment strategies Jeff Rose, CFP®, and CEO of Good Financial Cents® shares the following "trick" to help avoid a cycle of debt: "Pay a partial payment on your loan once a week or once every two weeks, rather than once a month. This helps keep your debt in the forefront of your mind and, typically, you'll save a little more in interest to boot. This frequent reminder that you're working toward being debt-free will help squelch the impulse to buy more things on credit. As a bonus, you may find it easier to send extra money by choosing one thing to go without per payment (such as an extra $10 by skipping the drive-thru one extra day this week). Important note: Make sure that you confirm how to properly send and have partial payments credited so you've paid the whole amount (or above it) before the monthly due date. Ask your loan grantor for help if the information you're given is at all unclear on how to accomplish this." Don't jump the gun with autopay "Stop automatic payments only when the loan is entirely paid off," advises Jacob Dayan, CEO, and Co-founder of Finance Pal and Community Tax. "In many cases, people who are attempting to make their last payments on a loan, see the end in sight of being debt-free, and stop their automatic payment too soon. Meaning, they will neglect to pay the loan in full and begin to receive late notices from a creditor. This can ultimately send many borrowers right back into the cycle of debt when having to then pay off late fees. Allowing these late fees to pile up can also negatively impact credit." Keep payment records "Keeping a good record of making the final payment on the personal loan can be very rewarding," says Dayan. "Holding a record of paying off a personal loan should be celebrated and these records can be a reminder that you can start living a debt-free life. Also, many lenders will send an automatic notice, but some might not. It is crucial to ask the lender to send the notice when the loan is paid in full to provide proof in case someone attempts to collect payments in the future." Make this personal loan your last Debt-consolidation loans are not a one-size-fits-all solution for all outstanding debts. If you are currently, or plan to use a personal loan for this purpose, you need to have a game plan. It isn't going to just work itself out. This expert advice will help you keep the loan and your debt-free goals in perspective. Make this the last personal loan you ever need.
Guest Post by Natalie Issa A new investment opportunity beckons, but you don't have the cash flow to dip into it. Could a personal loan be the right way to fund the endeavor? "You have to spend money to make money" is a common mantra of successful entrepreneurs and investors, and it's not wrong. And sometimes, you have to spend someone else's money and pay that back before you can make money. Plenty of small businesses were born on the backs of credit cards or personal loans. But whether taking out a personal loan to invest makes sense depends on factors such as loan and investment terms and a little bit of luck. Understanding the math Whether or not you should make an investment of any type typically comes down to a single question: Will it be profitable? If you're borrowing money to make the investment, you have to consider the cost of the loan in the equation. For example, the Best Egg personal loan comes with an APR of 5.99 percent to 29.99 percent for qualified applicants. Your credit score and other factors determine whether you're approved for this type of personal loan and what the interest rate and terms might be. Let's consider the best — and worst — case interest rates for this particular loan and how that stacks up when investing in various options. Returns on 5-year CD are under 3 percent. Since the interest you earn is less than the interest you pay out at either 5.99 percent or 29.99 percent, this is obviously not a scheme that pays. And since personal loans tend to come with fixed interest rates, that's not a truth likely to change. Money market mutual funds have average returns ranging from 1.76 percent to 4.54 percent. Again, if you're paying the interest on a personal loan, you'll pay more out than you earn. Some high-yield bond funds can yield rates as high as 8.93 percent. If you can get the best personal loan rates and luck out with high-yield bonds, you could turn a 3 percent profit. With a bit of knowledge and some luck, you might be able to turn a personal loan into a winning investment in the stock market. For example, if someone took out a personal loan for $5,000 in 1997 and used it to purchase 277 shares in Amazon at $18 a pop, they would now have more than $500,000 worth of shares. That's much more than any interest rate paid on the $5,000 personal loan. However, the stock market does work the other way. If someone purchased Ford stock in 1997 instead of Amazon, they would currently be holding a $5 per share loss — with no profit at all, much less enough profit to cover fees and interest rates on a personal loan. When you consider taking out a personal loan to invest, make sure you're running all the numbers. In addition to comparing interest rates between the loan and your investment, consider any other costs of the loan and whether you can make timely payments on it even before you investment pans out. When it makes more sense to do something else Investing the cash from a personal loan may not be the best way to maximize the value you can get from it. In some cases, using the funds from a personal loan to consolidate higher-interest credit card or other debt actually nets you more money via savings. For example, consider a credit card balance of $3,000 with an APR of 15 percent . If you can shop around for a personal loan that works for you and get approved for one with 6 percent APR, you can save a lot of money while paying off your debt. If you make payments of $100 a month on a credit card with a $3,000 balance and 15 percent interest, you'll pay in total $3,783.57. If you make payments of $100 a month on a personal loan of $3,000 with an APR of 6 percent, you'll pay in total $3,258.56. That's a savings of more than $500. Aside from the ability to save money, one of the benefits of using a personal loan to consolidate debt is that you're more likely to get the financial value you expect. All you have to do is hold up your end of the "bargain" by making the appropriate payments on your personal loan. As long as the terms and math line up in your favor, you will benefit from the savings. You don't get the same guarantee when you're investing. You can do everything correctly and still not come out ahead when you're playing the stock market. So, it's a good idea to avoid taking out personal loans to invest unless you're very sure about the opportunity. The Bottom Line If you have very good credit and are approved for personal loans at very low interest rates, you could profit by investing in opportunities that have higher interest rates than your loan does. For most people and investment situations, this can be risky. The biggest opportunity for profit comes from the stock market, but you won't know whether you've succeeded for potentially years. However, you can succeed immediately and save money by using personal loans to consolidate higher interest credit. Whether you're willing to gamble, paying to play for profit with investments, or you want to get a handle on debt and pay it off faster, personal loans can be a valuable tool. Check out all the options and apply for a personal loan today. Natalie Issa is a content specialist for Credit.com. Her experience spans working with a variety of content, including blog posts and journalistic articles, as well as film and podcasts. She’s applied her writing and editing expertise in the retail and digital industries at companies such as Overstock.com and Deseret Digital Media, while applying her creativity to passion projects in her personal time.