If you need money in an emergency then you may wonder what your options are. There may actually be more than you think and it could be a good idea to think about the pros and cons of each so that you will be able to decide which will be the best to suit you and the situation that you are in.
If you have any savings, then it can be a good idea to use those. His is because you will find that this will be the cheapest option for you. Even though you could find that you will miss out on a bit of interest, it is most likely that it will be much dearer to borrow money compared with using savings. It is not easy to do this as many people will not want to part with their savings and will think that they want to keep hold of them. Maybe they worry that there will be a worse emergency or that they are saving for something specific and they do not want to spend that money. However, it is worth bearing in mind that you could pay into those savings and replenish them and it will be a lot cheaper than taking out a loan. You could even use the money that you would have used to pay the loan, to pay into the savings.
An overdraft can be a really quick way to borrow money if you already have one arranged. It will be there for you to use with your current account so you can draw out money or transfer money which you do not have. If you do not have one arranged or have maxed it out then this will not be an option and you will also find that it could be expensive. There is no pressure to repay quickly and therefore it could mean that you will have the loan for a long time which will mean that the costs will add up. The interest is also quite high at usually 35% – 40% APR which compared to some other ways of borrowing is pretty expensive.
A credit card will allow you to be able to buy things and not pay for them immediately. It could be useful if you need to pay for things and a credit card makes an acceptable form of payment. However, unless you have a credit card already then it may take too long to get one. You may also have already spent as much as you are allowed to on the card. A credit card interest may not be so high as an overdraft but you will not need to pay back more than a small minimum each month. If you just pay the minimum you could take years to repay what you have borrowed and that interest can really add up.
Borrowing From Friends and Family
It can sometimes be worth asking people you know if you can borrow money form them. They are likely to be happy to help you and they might not even charge you interest. Even if they do charge you it could be less than a traditional lender. You may want to be careful though and make sure that you agree with them how and when you will repay so that you cannot fall out over this in the future.
A payday loan can be arranged quickly, although the speed will vary between lenders but could take as little as a few hours. However, you will need to repay it very quickly, and in full. So, on the next time that you are paid you will need to repay it all and so that could be difficult to manage. It is worth thinking about whether you will be able to afford this as if you miss a repayment there will be additional charges to pay.