5 Credit Options to Finance your Emergency Expenses | 2022


22 Nov 2020 | 5 min read

You must be facing or would have confronted a financial emergency, therefore, you are here. Well, you are at the perfect place! A sudden financial crisis can easily lead someone feeling off guard and powerless. Be it a job loss, medical expenditure, or an urgent home renovation, the immediate high tide in your financial condition can be extremely nerve-racking.

Regardless of stress in the situation, you still will have to pay your bills, the lights still need to be on, and food still requires to be on the plate. If you have recently been hit by a financial emergency or facing it at present, this blog will surely help you, just stick with it and eventually follow it.

Here are the top 5 credit options that you can opt for in order to conquer a financial emergency:

1. Personal loan

Personal loans in India are one of the most prioritized alternatives in order to tackle an instant fund crisis. These are unsecured in nature which means that you are not required to promise any kind of collateral in order to avail it.

Although, banks generally consider your credit score and credit history prior to approving a loan. The rate of interest on personal loans differs from bank to bank. It relies on factors such as your credit score, the loan amount, tenor, etc.

Generally, the interest rate on personal loans are charged between 8.5% and 25% p.a. while the repayment tenure for a personal loan ranges from 1 year to 5 years, and again which varies from lender to lender. Afterwards, you are supposed to pay off a personal loan in the form of easy monthly instalments.

Many moneylenders also take a processing fee and prepayment and part-prepayment charges on a personal loan. But before you opt for a loan, make sure, you have all the relevant documents. The bank generally asks borrowers to submit documents such as proof of identity, proof of address and proof of income.

Moreover, take a note that the required documents can slightly vary for salaried and self-employed loan applicants.

2. Gold loan

Gold loan or loan against gold is a term which remains stable in searches and opted quite frequently. Due to a recent spike in the gold prices, the loan amount will now be higher from the pre-existing one. The rate of interest is comparatively low on a gold loan. Although, you may also negotiate on the repayment tenure.

3. Credit card

Moneylenders offer a pre-approved loan against credit card to existing cardholders with constant bill repayment history. Since the loan is pre-approved, the processing time is minimal and the amount gets disbursed immediately or within the matter of a few hours post submitting the application.

Repayment tenure can be chosen from 6 months to 5 years and rates of interest begin from 10.99% depending on the term chosen and the credit profile of the cardholder.

4. Choose no-cast EMIs

Opting for no cost EMI can also be a positive credit option for you in the times of financial emergency. It is similar to a typical EMI alternative but you are not required to pay the interest amount along with the principal amount.

In such offers, the interest you are required to pay on buying a product will be charged by taking back the discount by the lender at the checkout time.

While no-cost equated monthly instalments or EMIs saves you from paying a lump sum amount in advance for a product, you should also keep a note that usually there are hidden costs that you will have to pay in order to avail of no-cost EMI on products.

5. Fixed deposit

If you possess any fixed deposit then you can avail an instant loan by promising that FD in times of emergencies. It is one the best ways to meet your instant financial requirements since the margin amount is very less and you can avail up to 90-95% of the deposit amount in the form of the loan. Generally, lenders charge 2% more than the FD rate of interest on these types of loans.

The special note

Now, when you know about the top 5 credit options in India to power up yourself to conquer a financial emergency, you also need to be positive, make your financial life in order by prioritizing only the essential expenditures.

Cutting your spending would surely help you in this time. You must once ask for a raise too because your employer or client is also a human being, thereby, there are chances, they would understand and perform accordingly.

If you consider the aforementioned 5 credit options to finance your emergency expenses, you will probably come out of the financial contingency far sooner than you have thought.

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