What are my finance options when I need emergency cash?
Everyone deals with having to wriggle out of a financial crisis at some point. If you have meticulously planned your finances and investments a temporary cash crunch may be easier to deal with. But very often we fail to do so although financial experts have been giving us this sound advice for many generations now. There may be many reasons for not being ready for such a situation either because you don’t realize it could happen to you, you simply because you can’t afford it, you spent your savings on higher education or your funds are all locked on long-term investments.
When you are suddenly hit by a financial road block the first thing to remember is – DON’T PANIC! Misfortunes hit everybody — whether it’s losing a job, an illness or just an unexpected expenditure. You still have several avenues you can explore including sounding out friends and relatives to help you tide over the situation. If that’s not the most comfortable option for you many companies offer employees personal loans at subsidized interest rates. You could check with your company to see if they offer such a facility. The biggest advantage would be that it will be hassle free when compared to a bank loan. Some other options available to you are listed below:
Bank Overdraft
Your bank may be willing to offer you an overdraft facility which will allow you access to cash in no time. A bank overdraft is relatively cheap and there is no paperwork involved in this. You can also apply for a loan or overdraft using you insurance policies, mutual funds, national saving certificates or government bonds, shares, securities etc. A loan against securities are much cheaper than personal loans and the borrowing limit may differ but is usually in the range of 60-65 percent of the values of these securities.
Loan Against Property
Offering a collateral is the best means to get a loan in an emergency as this gives the lender some security and can take care of the lender’s risk. This may also allow you to get the secured loan at a substantially lower interest rate than you would have gotten a secured loan for. If you are taking a loan against property the downside is that processing may take longer. If you need urgent cash, a loan against gold or car would probably be processed faster than a loan against property.
Personal loans
Personal loans are growing in popularity as a source of immediate cash. Although interest rates on personal loans are on the higher side many banks can sanction personal loans in less than a week. Personal loans offer consumers easy access to funds without the need to provide any security and if you already have an account with the bank it may be much easier for you to get a personal loan.
Credit card
Credit cards come in handy in a crisis situation and allow you to withdraw cash from ATMs. A credit card will usually have a cash withdrawal limit and interest charged on cash would also be different from what is levied for card usage. But if you need instant cash with no processing time, this is definitely the best option.
Moneylenders
The neighbourhood moneylender provides you money in an emergency without fuss. But you should resort to this as the last option after exhausting all other avenues. Interest rates of 50-60 percent annually are common with private moneylenders and they may take advantage of your desperation by charging hefty interest rates.
