High Interest Emergency Loans: 10 Alternatives You Should Know

Category: Financial News

Emergency loans can be a life-saver or the total opposite, depending on the nature of the emergency and from what source the much needed money will come from. Since emergency entails looking for the money first (to urgently address the emergency, especially if it is a life-threatening situation) and thinking of how to pay later, many borrowers of these types of loans fall into an accrued debt pit.

This is not to say that payday loans and daily-interest personal loans are outward bad loans. The same peril can be inflicted upon those who availed of cash from their credit card balances. The problem lies when the borrower cannot fulfil the stringent obligations that these types of quick cash debt options require.

But in times of emergencies, does one really have no other option but these conventional interest-based solutions? The answer is no, since there are other options one can consider, and they are actually not only better alternatives, but can be availed of as fast and easy as payday loan processors.

Before resorting to short-term, high-interest loans for cash emergencies, explore first some better alternatives often forgotten or overlooked, especially when one is overwhelmed by the urgency of the financial need.

We rounded up 10 ways to secure emergency money fast without the high interest strings attached. For the list, we try not to leave out possible places and spaces where one can secure ready money, no matter how small the amount may be.

1. Personal loan from family and friends

Getting a personal loan from people close to you  is usually the first line of emergency support that most people explore. This is mainly because family, relatives and friends are a natural moral support network one can run to, and can be extended into a financial support team if one is fortunate to have them. Even if in some rare instances, an interest is to be put on the principal amount, it can be negotiated on a personal basis.

Some personal loan arrangements also entail the formality of legal requirements like a notarized contract or witnesses, but these are just standard precautions to make the trust of the lender and your commitment as the borrower legal and binding. The important thing is you secure a solution and at a substantially lower repayment fee, if at all there is one imposed.

2. Look into your own company

Does your company offer an emergency fund assistance that you can avail of, either as an employee loan with standard terms or as a kind of salary advance? There are many cases when crucial money emergencies were solved with a good company’s employee emergency fund program.

These are often low- or no-interest bearing. Payments are often arranged as small salary deduction on a given period. If your company offers one, file your application as soon as possible. By the nature of it being an emergency assistance, companies process this within the day or two days at the most.

3. Sell some items you own and can do without

Take time and explore your options where selling personal or household stuff is concerned. Do you have a spare cellular phone, for example and some other household stuff like a second or third television set that you can sell quickly to add up to the needed amount?

A possible downside to this is you will definitely be quoted a lower value if you need the money urgently, compared to selling items under natural circumstances (posting on eBay or personal marketing.) But some people, understanding the nature of the circumstance you are in, would be willing to make a fair valuation.

4. Scour reputable and low-interest pawn shops

If you cannot part with a precious personal item like jewellery or gadgets with sentimental value (a gift or a prize), opt to pawn it instead. Pawning things is resorted to by some 8 million households in the U.S., and understandably so, since pawned interest is lower than conventional loans from a quick lending company and payday loans.

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Pawnshops in the US are covered by rules and regulations that vary from state to state. Listings are available online so you can scour for better terms and also transact with only the reputable ones.

5. Get a flexible credit against a standard collateral

If for some reason, the options above are not feasible (no family personal loan to turn to, company does not offer employee emergency cash benefit, there is nothing to sell or pawn from your personal or household items) and you need a big amount right away, try securing a flexible credit against a collateral, like your car.

Some lending companies grant this in view of the situation at hand, especially if you have been a good creditor before or have someone who can endorse you personally and vouch for your payment ability.

6. Make a personal appeal or promissory note

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On top of emergencies, it is highly probable you have set aside money to fund your regular payables. When emergency strikes and you need to prioritize where available money goes, making a promissory note or a personal appeal to defer payments to people or companies you are obligated is a smart way to rechannel ready cash (example is your salary) to the emergency situation. Also, seek the help or endorsement of people who should be helping you, like your broker when making a personal appeal to your developer or landlord, and business partner when appealing to your capital lender.

The special personal appeal is especially helpful (and crucial) if you have issued post-dated checks. Make an appeal for these checks not to be deposited until after you have ready funds. To be sure, talk to your bank and explain your situation so that cancellation of current checks for deposits should be applied and you won’t be charged the high penalty for unfunded checks. Once you have cleared the way through good personal appeals with all parties concerned, you can safely re-channel whatever ready or expected cash you have to the emergency situation.

7. Make a review of your own borrowers

We have established that  debt and the need to borrow money, especially for emergency, is something most people need to deal with at some point in their lives. This means it can also be likely that in the past, you may have lent someone some money.

It could be that these loans have been forgotten, you’ve lost touch with the borrower, or simply more pressing things in life took over that you and your borrower were not able to settle the debt formally. These are often small amounts but it does not matter. If you have such collectibles, the time has appropriately come for you to demand repayment.

First, make a thorough review of your past lending activities and if you are sure that the money remains to be paid, collect right away. The person who owed you should know the circumstance you have at the present, being a borrower too whom you once helped.

8. Do some quick cash loan shopping

Let us say you really have no option but to turn to quick cash lenders. It’s not the end of the world, and don’t feel like you have doomed yourself for a life of perpetual high interest debt repayment. There are things you can do to make your payment easy and manageable. This is also where a good consumer education and knowledge and skills on personal finance and financial management would come in.

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First, refer to state listings of quick cash lenders and read up on their requirements as against what you already have so you don’t waste more time. Analyze and compare interest rates, collateral requirements, repayment conditions and other terms that may make repayment easier (or harder) for you.

The objective here is to wisely use a time allowance you have to shop wisely for the much better loan and lender. After you have attained some peace of mind (the emergency has been responded to) and things are back to normal, you can focus on paying your quick-cash lender. If you have earned some good amount of money back, pay in full right away.

9. Pool money from no and low-interest options

Combining various emergency money sources is a good option if you need an unusually large amount of emergency money. This works like having a diversified loan sources so that you spread the needed amount into low- and no-interest payables, and control the high-interest ones in terms of the principal amount, and therefore interest basis that they will entail.

With this option, you will still come up with a much lesser interest payments than securing a large amount of emergency money from one lending company, worse, if it is a payday loan.

10. Places where you may have kept some money

Photo 3It is always a great feeling whenever we discover some bills which we kept hidden in some places at home or anywhere in our personal belongings. Some people even deliberately do this for the expectation of a nice surprise in the future. You may have stashed away some bills in between your books, in the jeans pocket tossed in the laundry basket, in your shoes or socks, underneath your bed mattress or in the breast pocket of your coat.

One obvious place that people overwhelmed with emergency is their personal money stash – the piggybank, the coin and dollar slot in the car, the dollar bowl on the kitchen shelf. Remember, small amounts can add up to something already significant especially in times of emergency. This could be the first or last step in your emergency cash search, either way, it is bound to give you something of value.

Some quick notes to ponder:

Note that in our quick emergency loan tips, we have excluded options that may be the first or top-of-mind options but are really not applicable by the nature of an “emergency’ situation. These include taking out a loan against your 401k plan, filing for bankruptcy loan, or applying for a multi-purpose loan. Aside from entailing time, they are also often high-interest debts. Still, if you want to consider these loans in place of other options, you should have and allot time to seek the guidance of an unbiased professional loan expert or a debt counsellor (meaning not attached to a specific lending company or bank).

Emergencies are a fact of life, and because of their very nature, one is often unprepared for it, especially where money is concerned. Knowing how to face the challenges of getting your hands at a much-needed money minus the strings attached will save you the agony of paying escalating interests in the future, but allows you to focus on the more important thing at hand – fixing the emergency situation and getting life back to normal again.

Do you know other smart and helpful alternatives in place of high-interest emergency loans? Share it with us!


By Nestor Gilbert

Senior writer for FinancesOnline. If he is not writing about the booming SaaS and B2B industry, with special focus on developments in CRM and business intelligence software spaces, he is editing manuscripts for aspiring and veteran authors. He has compiled years of experience editing book titles and writing for popular marketing and technical publications.

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