An Emergency Loan is a Personal Loan you can use to cover unexpected expenses. People often borrow them when they need money to cover an urgent expense but may not have enough savings to deal with the emergency. They can use the loan to cover various costs, such as a home renovation, travel plan, education, debt consolidation, or wedding expenses. However, before applying for an instant loan, you must know certain things to make an informed choice.
What is an Emergency Loan?
An emergency loan is a go-to choice for managing urgent expenses. That is because they provide the required funds quickly, usually within a few hours of approval, with an approval process. These loans have fixed interest rates, which keep the EMIs constant throughout the tenure.
You can spread the repayment over several months to a few years, depending on your preference and financial situation. Using a Personal Loan EMI Calculator, you can choose a tenure with budget-friendly instalments. The thing is that instant loans are unsecured, which means you don’t need to pledge an asset as security to obtain it.
Five Important Things About Personal Loans
If you are planning to borrow a Personal Loan for an emergency, here are the five most important things you must know:
- You Can Use the Loan Amount for Diverse Purposes
- Wedding Expenses: Venue, catering, decorations, photography, guest accommodation, outfits, accessories, jewellery, gifts, invites, etc.
- Travel Plans: Airfare, hotel accommodation, visa fees, sightseeing, activities, local transportation, travel insurance, or shopping.
- Home Renovations: Raw materials, architect, designing, shipping, storage, labour.
- Education Costs: Admission and tuition fees, study materials and equipment, lodging, accommodation, entertainment, student visa, and transportation.
Once you decide the purpose for which you need the money, evaluate the associated costs and decide upon an adequate loan amount. Ensure the amount you borrow is sufficient to cover the expenses. However, avoid over-borrowing, which increases your debt burden and makes repayment more challenging.
- Credit Score is Crucial for Your Loan Eligibility
Lending institutions expect a good credit rating when evaluating your loan application, as it indicates your intention and capacity to repay the loan on time.
Maintain a decent credit score to attract lucrative loan offers. If it is low, work towards improving it before seeking new credit. Some ways to improve the credit score include the following:
- Pay your loan EMIs and credit card bills on time.
- Avoid being a co-applicant or guarantor.
- Request an increase in your credit limit.
- Borrow money only when necessary.
- Monitor your credit report and rectify any errors in time.
- Diversify your credit portfolio with different types of loans and credit products.
While some lending institutions have a minimum credit score requirement, others prefer a decent loan approval rating.
- You are Free to Choose a Tenure According to Your Repayment Capacity
When you borrow a loan, you must repay it to the lender along with the applicable interest rate. The loan provider gives you a timeline for clearing your dues. However, with an Emergency Loan, you have flexible repayment options. You can choose a longer tenure for smaller EMIs or opt for a shorter tenure to reduce the overall interest costs.
A personal loan EMI calculator calculates EMIs for various loan amounts and terms. Workaround different variables until you reach a repayment plan that best suits your repayment capacity. For instance, at Hero FinCorp, you can choose a tenure between 12 and 36 months based on your EMI affordability.
- Applying for an Online Loan is Completely Safe
They let you apply for the required loan from the comfort of your home without any office visits or paperwork. However, due to security issues, some aspiring borrowers need clarification about sharing their personal and financial details online. Rest assured that you don’t need to worry about data security using a lending platform like Hero FinCorp. They use advanced security measures, like encryption and two-factor authentication, to protect your data.
- Additional Charges Apply
Apart from the principal amount and interest cost, you must be ready to pay a few additional charges to the lender. These include processing fees, prepayment charges, foreclosure charges, late payment penalties, documentation charges, etc. Since most borrowers overlook these charges and often find them as a surprise, it’s crucial to enquire about them before finalising a loan deal. Read the loan agreement carefully to gain information about these charges and be prepared for them.
Borrowing an Emergency Loan is a crucial financial decision that requires careful planning and consideration. Considering these five things can help you make an informed borrowing decision that best fits your financial situation. At Hero FinCorp, you can obtain a Personal Loan of Rs 50,000 to Rs 5 Lakh with easy repayment options from 12 to 36 months. Enjoy competitive rates starting at 1.58% per month and benefit from a paperless application procedure with instant approvals.
Disclaimer: The information provided in this blog post is intended for informational purposes only. The content is based on research and opinions available at the time of writing. While we strive to ensure accuracy, we do not claim to be exhaustive or definitive. Readers are advised to independently verify any details mentioned here, such as specifications, features, and availability, before making any decisions. Hero FinCorp does not take responsibility for any discrepancies, inaccuracies, or changes that may occur after the publication of this blog. The choice to rely on the information presented herein is at the reader’s discretion, and we recommend consulting official sources and experts for the most up-to-date and accurate information about the featured products.
