You might be feeling like it’s getting increasingly difficult to stretch your money to meet your needs throughout the month, let alone when you’re faced with another unexpected bill on top of this. Emergencies can cause cash flow issues and can leave you worried about how you’re going to make the payment without falling further into difficulty. But you’re not alone. Many of us will struggle to manage in situations like this but knowing where to turn can be helpful. There are a few different types of financial support that we’ll look at in more detail below, from payday loans to short-term loans, and alternative support that may be helpful. Read on to find out more.
What do we mean by a financial emergency?
More of us may be struggling to make ends meet as the cost of living rises, which means that more of us will be at risk of not being able to make our income stretch far enough to cover our living costs. This can be made even more difficult if you’re faced with an emergency– this could be anything from a broken boiler, a broken-down car, medical bills, or a disaster that has left you with nowhere to live. Emergencies can put pressure on our already stretched income and might leave some of us wondering how we’re going to pay for it. Thankfully, there are finance options available from alternative lenders, as well as the local community that can help you through these challenging times. We’ll take a closer look at your options for emergency finance below.
Common financial support solutions
It’s not uncommon to need financial help at some point in your life, whether you’re going through a period of unemployment, you’re currently working in a low-paid or seasonal job, or your bills are simply exceeding your current income. This is why there are financial solutions to help us because it’s an issue that anyone can face. We’re going to take a deeper look at some of the most common financial solutions from alternative lenders – how they work, and if they could help you.
Short-term loans
A short-term loan can be paid back over a couple of months, or for up to two years, in comparison to long-term loans which are paid back over a longer period. These loans are often used to help with cash flow, and to manage emergency expenses. There are a few benefits that come with these loans, such as you can apply for them quickly and easily with the help of alternative lenders online. The process will not take as long as it would if you were obtaining funds in the form of a traditional loan from a bank. They are also highly accessible, even if you have bad credit, lenders’ approval rates are usually based on affordability, which means you can have access to cash quickly, when you need it most.
Unfortunately, there are also disadvantages to this type of loan. Short-term loans may not offer you the amount of money you’re looking for, due to the fact they have a short repayment term. Because requirements are more flexible, if you have bad credit, you may also find your interest rates increase drastically. Whilst short-term loans can help you if you need money quickly, you should make sure you can afford the total cost of the loan – including fees and interest.
Payday loans
Another of the most common types of loan that is offered by alternative lenders for those struggling with an emergency is a payday loan. These loans are used to help you get by until payday, but then you will have to pay the money back in as little as a month. Whilst these loans are easy to apply for and have more lenient requirements so it’s possible to be approved even if you have bad credit, they often end up being incredibly expensive due to the interest rates that come with them. Whilst you can take advantage of using these payday loans if you’re stuck with an unprecedented situation and no other way to deal with it, you should make sure that you can afford to make the repayments. These loans could end up with you falling into further financial difficulty if you do not choose to use them wisely.
Alternative solutions for emergencies
So, if you need help with your finances, there are ways in which you can seek help without taking out a loan. If you’re faced with an emergency and you’re not sure where to turn, there is government funding, local charities, and benefits that could all be helpful. Here are a few examples of these alternative funding solutions.
Emergency benefit payments
If you receive benefits for whatever reason from the government, you may be entitled to use some of the emergency support solutions they have available. For example, if you receive a benefit and you are struggling, and you can show evidence that you cannot pay for an unexpected bill, you may be eligible for an advance on your monthly payments to tide you over. Whilst you will have to pay this benefit advance back, it can be useful to get you through the situation you’re in, and you can make a plan to pay back the money when you finally have the funds.
Charities
Some charities work to help people specifically suffering from financial hardship brought on by emergency expenses, and you should use their services if you’re having difficulty. Charities can help you manage your finances and create a plan that can help you stretch your money further. Some charities can give you advice on how to make your money work for you, how to pay off debt, and can help you figure out what you should do if you can’t pay an emergency bill. These charities may be able to point you in the right direction when it comes to money management and give you advice on where you should seek help with your finances, which will cause as little detriment to your situation as possible.