If you have financial challenges, you know the need for extra money can come up fast. If you don’t have an emergency fund or savings, you may feel stuck between a rock and a hard place.
Thankfully, there are more options for how to get emergency money fast than ever. You can find an option that meets your needs if you carefully evaluate the available choices. You’ll want to get the best possible terms for your situation while minimizing the risk.
If you’re asking yourself how to get emergency money, consider these options.
If you have retirement savings in an employer-sponsored 401(k), you can borrow from these funds in an emergency. There are limits on how much you can borrow, and you must replace the money within five years to avoid financial penalties. Your 401(k) plan determines the interest rate.
No credit check is required for a 401(k) loan, so this may be a quick and convenient option. Some plans will let you make payments via payroll deduction, which could help you replace the money within a few years. There are no prepayment penalties, so you can repay the money as quickly as you like.
But beware: if you lose your job or leave the company, you’ll need to repay the balance immediately. If you don’t, there are big financial penalties.
Risk is a significant consideration with 401(k) borrowing because your future income could be at risk. When you take out a 401(k) loan you lose out on any market growth those funds might have brought, and you could be subject to significant financial penalties.
If your credit card offers cash advances, this could give you instant access to money.
But there are risks to consider. Many lenders charge a higher percent interest for a cash advance than for normal purchases. And while most credit cards offer a grace period before interest charges begin on a purchase, interest starts to add up immediately on cash advances. Cash advances can also carry an up-front fee from the card company. Finally, taking a cash advance on a credit card will affect your credit utilization, which can impact your credit score.
If your credit card limit allows it, you’re better off charging the emergency expense as a purchase. You’ll pay less interest for the funds this way. And thanks to the grace period on purchases, you might be able to pay the bill off before interest begins accruing.
Despite these risks, if you have challenging credit or few affordable financing options, a credit card cash advance may be one of your best options.
If you own your vehicle (or boat, or RV) – it’s paid off completely and you have the title in hand – you could be eligible for a vehicle title loan. This is a loan where you offer your vehicle as the collateral. You may be able to borrow up to the value of the car, and the funds might be available right away.
If you do have a loan on your car, you may be eligible for a different vehicle loan. This works when you have equity available between the car’s current value and what can be refinanced. These loans have a set term and interest rate.
The risks are clear with vehicle loans. If you can’t pay the loan back, you could lose your car. This could mean losing your transportation to work, and that could mean the loss of your income too. Interest rates may be higher than traditional loan options, so be sure to compare. Consider a vehicle loan very carefully before using it as an option for emergency funds.
Low-interest loans from employers and financial institutions may be a good option if you need money urgently. These loans, especially those from online lenders, can offer next-day or even same-day funding. Others can take a day or two, so take this into account.
Some employers offer low-interest loans to help employees who are working through temporary financial challenges. Different companies will have different policies.
Credit unions and banks will also offer personal loans to qualified customers. The interest rates vary and are based on a credit assessment. Typically, personal loans allow customers to repay the debt over several years.
If you have low credit, don’t despair: there are lenders who specialize in helping customers with challenging credit. Just keep in mind that if you have low credit, you are a riskier customer in a lender’s eyes – and that means you’ll be charged a higher interest rate than someone with better credit.
Be sure to shop around and compare lenders, including their customer ratings, loan terms, interest rates, etc. when considering a personal loan. Installment loan calculators can help you more easily compare loans.
If you own a home, you might be able to borrow against the portion you’ve paid off, also known as your “home equity.”
There are several types of loans available, including a home equity loan, a home equity line of credit (commonly called a HELOC), or a cash-out refinance. Since these are secured loans against the value of your home, they usually have lower interest rates than credit cards and personal loans.
Watch out for HELOCs with adjustable rates, or you could end up suddenly paying much higher interest. Also carefully compare lenders and look out for fees with any of these loans.
The risk with these loans is a big one: if you default (fail to pay), the bank could foreclose on your home.
If you have a true financial emergency, talk with your employer. Some companies offer a payroll advance, where they give you the money you’ve already earned immediately, before payday. Some employers will even give you an advance on your scheduled hours, even if you haven’t worked them yet.
Of course, you can also ask for extra hours to make extra money and improve your financial situation. (If you find you must take out a loan, this can also be a great way to pay it back quickly and save yourself interest.)
A payroll advance from your company can be a great option for emergency cash because you don’t pay interest. Assuming you have a good relationship with your employer, this could be a great answer to the question “where can I get emergency money?”
Borrowing from friends and family can be a fast way to get money in an emergency. You typically pay no interest, or possibly a low rate. Friends or family members may also give you more flexibility in how soon you must pay them back.
If you’re going to borrow from your loved ones, make sure you negotiate the terms and put them in writing. This protects both of you and your relationship. Spell out the repayment terms/schedule, any interest, and determine what penalties (if any) will occur for missed payments or defaulting on the loan. A few minutes of uncomfortable conversation are better than a wrecked relationship down the line.
If you’re asking yourself how to get money for emergency needs like food, clothing, shelter, medical bills and the like, don’t forget to consider donations. Some friends, family, churches, charities, and even strangers are willing to donate to help you in a true emergency, with no expectation of repayment. Don’t be afraid to reach out for help.
Our blog post, “What is an emergency fund?” outlines all the basics, including how to build your own emergency fund.
Experian.com suggests only using your emergency fund when you must pay for something immediately or your life or health will be majorly disrupted. Emergency money should not be used for discretionary spending on things you don’t need.
Keep track of all your spending and save receipts. This way if you need to request reimbursement later from homeowners’ or health insurance, you have all the documentation. Keep it all together, somewhere safe. Also, spend conservatively, especially if the emergency is ongoing or your income is disrupted, so you can be sure you have what you need.
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