Exploring the benefits of quick personal loans for emergencies
Photo by David Peterson
Do you need a short-term loan for emergencies in Australia?
The washing machine dies.
Or perhaps a medical bill lands in your lap that you weren’t expecting.
It happens to the best of us.
The issue:
Most people aren’t financially prepared for such curveballs.
And when an emergency expense rears its ugly head, you need to get help ASAP.
That’s where short-term personal loans in Australia can really save the day.
This guide shows why short-term loans are so useful in these situations, and how they work.
- What are quick personal loans?
- Why do I need quick cash in financial emergencies?
- Top 5 reasons to get a quick personal loan
- What’s the best quick personal loan to choose?
- Managing your short-term loan like a pro
Short-term personal loans, explained
Quick personal loans, as the name suggests, are loans that allow you to get quick access to funds.
In the past, this used to take a long time. But thanks to online lenders and direct lending websites, getting a personal loan has never been easier.
When you opt for a short-term loan with a lender like One Hour Loan, for example, the entire process can be completed within 24 hours of your application.
Apply online, get approved (sometimes within a few hours), and then have the money transferred straight into your bank account. These types of short-term loans are perfect for urgent financial needs.
Around 47.6% of borrowers use personal loans for emergency needs and debt consolidation, so these short-term loans clearly work.
The importance of speed in financial emergencies
Time is not your friend in a financial emergency.
Late fees start to add up.
Service cut-off notices get sent.
Medical procedures can’t be postponed indefinitely.
Here’s what that means:
Say your car breaks down and you need it to get to work.
Each day you don’t have a working vehicle, you’re missing a day of income. Your emergency situation will only cost you more the longer you go without transportation.
Traditional bank loans can take forever.
Bank appointments. Weeks of paperwork. Loads of back and forth.
To get an emergency personal loan, you need one of those speedier lenders mentioned above.
The benefits of a quick personal loan
Now that the speed of fast cash from a quick personal loan is clear, let’s talk about some of the other great benefits they have.
1. Lightning-fast approval
The big win with a short-term personal loan is just how fast the whole process goes.
Apply for your loan online or through an app on your phone or computer in minutes. Many lenders offer pre-approval decisions in just a few hours. Others can fund the same day. Some will transfer money within 24 hours of your approval.
The point is clear.
That is what makes a personal loan like these so much better in an emergency situation.
2. No collateral required
Most quick personal loans are unsecured.
This means you don’t have to put up your home, car, or any other assets as security against the loan.
You’re not putting your property on the line.
Here’s what that means:
Secured loans require appraisals, title searches, and lots of extra paperwork.
Paperwork that takes time. Time you may not have in an emergency.
3. Flexible loan amounts
Quick personal loans are available in small to medium-sized amounts.
Need $2,000 for a car repair?
Great, borrow that.
Need $5,000 for a medical procedure?
That works, too.
4. Predictable repayment terms
Predictability is the name of the game here.
Interest rates are fixed and payment schedules are set.
You will always know exactly how much you owe every month.
No surprises and no variable rates that suddenly double. Remember, with average personal loan rates sitting at 12.44%, you can calculate how much your loan will cost upfront.
Budgeting becomes much simpler as a result.
5. Improve your credit score
Did you know you can build your credit score with on-time payments on your quick personal loan?
Payment history is a massive factor in your credit scoring. As such, every on-time payment made on your loan will be reported to credit bureaus.
The result:
Your credit score goes up over time, and you get better rates on future loans.
6. Cheaper than other options
Personal loans are also often cheaper than other options for emergency money.
Credit card cash advances come with high interest rates.
Plus, you start accruing interest right away.
Payday loans are notoriously high-interest. APRs in the 400% range are common.
Personal loans offer a happy medium: fast cash at a lower rate.
What’s the best emergency loan to choose?
If you know anything about the world of personal loans, you know there are a lot of different types out there.
All with different terms, conditions, rates, and features. The job of the borrower is to choose the one that best suits their needs.
It’s not as easy as it sounds, that’s for sure.
Comparison shop
If you’re not careful, you’ll just get stuck with whatever lender throws the first offer at you.
Do your due diligence, and take 20 to 30 minutes to compare at least three options.
Interest rate + fees
The interest rate is important because it’s the primary determinant of how much you’ll pay over the life of the loan.
But don’t forget the fees.
Origination fees. Late payment penalties. Prepayment penalties. Processing fees. Look out for all of them.
They all add up to the total cost.
The small print
This is the boring part. But it matters.
In the loan agreement, you’ll find all the important details about how you’ll be repaid. Read them. Know them. Make sure you understand exactly what you’re signing.
Credentials
A quick check to make sure you’re working with a reputable lender.
Look for online reviews from other customers. Licensing info. Contact details. Verify everything.
Borrow only what you need
Key point:
Don’t be tempted to borrow more “just in case.”
You pay interest on every dollar you borrow.
Calculate the exact amount you need for the emergency at hand. Give yourself a little cushion if necessary, but don’t borrow more than you’ll need.
Loan management: The responsible way
Securing the loan is one thing.
Making sure you can manage it properly is another.
Auto-pay
Most lenders offer automatic payment options.
This is the best way to ensure you never miss a payment. Late payments ding your credit score and incur penalties.
Set it up, then forget it.
Repayment budget
It’s great to have the emergency money, but you must know exactly where that loan payment is coming from each month.
Know your income. Know your expenses. Look for ways to trim things back if necessary. Create a bulletproof budget and you’ll repay that loan on time.
Pay extra if you can
Make those extra payments when possible.
They reduce the total cost of the loan by reducing the interest you pay. And many personal loans can be repaid early without penalty.
The final word
Personal loans are a great way to secure the money you need to handle financial emergencies that pop up without warning.
With their speed, flexibility, and transparency, they’re often the perfect solution for when you’re in a bind. Having quick access to funds can prevent a short-term problem from turning into a long-term disaster.
The trick is choosing the right lender and borrowing sensibly.
Compare your options. Read the terms and conditions carefully. Borrow only what you need. Then, make a repayment plan you can commit to and succeed at.
Financial emergencies are stressful enough without the added headache of worrying about how to pay for them.
Personal loans can take that pressure off by providing you with money when you need it most.
The best time to do your research on your options is well before the fact. When you know where to look ahead of time, when an emergency expense hits, you already have your contacts at the ready.