4 options when faced with a financial emergency

With almost 10 million households a year having no savings to fall back on, managing finances in an emergency is a common problem that many are dealing with on a day to day basis.

Some turn to quick short term loans, however, interests rates on these can be high and thus there may not be a suitable financial option for a household already struggling to save on a monthly basis. There are alternatives. In this article, we have compiled the options that are available to you in case of a financial emergency. 

Borrowing From Family

Borrowing money from a family member could be an alternative to taking out a loan and it is not something that will affect your credit score. New research has shown that 67% of 18-24-year-olds have borrowed from their family and friends in their lifetime. This is beneficial for this particular age group as it is then be paid back either in monthly instalments or in a lump sum to ensure you are clear of debt to your loved one. 

Alternative Lenders 

As the need for quick cash has begun to increase there has also been an increase in the number of alternative finance options that are available to help you during this difficult time. With short term and payday loan options available, you can apply for the finances and usually have it in your account within one working day. This can be useful when faced with an unexpected bill or a broken-down car as you can fix your situation quickly and repay the loan when payday rolls around. With a number of resources available online such as a visual guide to a payday loan, can provide you with insight and requirements before opting for this loan type or any other in the future. 

Peer To Peer Lending 

Peer To Peer lending is another way to find money in a financial emergency as it brings borrowers and lenders together with interest rates to suit both parties involved. Due to this being completely separated from any traditional financial institution, a peer to peer lending platform can match you up directly with those willing to lend you the amount you need. One of the benefits to these platforms is that some do not have a minimum loan amount and also offer interest rates as low as around 3% for those with a good credit score. This is beneficial for those struggling with a financial emergency it allows you to borrow regardless of the amount that you need. 

In order to use a platform such as this effectively, you will need to have a suitable credit score and pass the iinitial financial checks conducted by the company themselves to ensure that both lenders and borrowers are suitable to join the platform and can equally benefit one another. 

Sell your items

Alternatively, you can put together some money by selling any unwanted items that you may have. Whether this is on eBay, Facebook Marketplace or Gumtree, you can have payment within a few days and also clear space in your home. You can also opt to attend a car boot sale in your local area as a study conducted in 2017 showed that Brits spend on average £1.5 billion a year at car boot sales, making this the perfect way to gain money quickly for your unwanted items. 

From loans to borrowing from your family, there are a number of alternative finance options that can help in an emergency. It’s important to consider all of your options before applying for any loan, to ensure that you are making the best decision for your financial health. 

Keep up with the top stories from Reader’s Digest by subscribing to our weekly newsletter.