“Because, failing to plan is planning to fail!”
An emergency knocks when least expected, and in those times, the hardest to organize and manage are ‘finances’. Although it’s a well-established rule that you MUST have an emergency fund equal to at least six months’ expenses in place, that often isn’t the case. So, in times of a financial emergency, when you need money urgently, here’s what you can do:
Borrow from your employer
When an emergency strikes, consider your workplace first. Many companies have policies in place to extend an advance on salaries. On an average, the funds could be equivalent to 1-6 month’s take-home pay and is deducted from the salary over 3-24 months. The interest rates average from 5-8%.
Advantage: the loan can be disbursed instantly, and can be customized to your needs. Often, some companies also extend such loans totally interest-free.
Downside: this loan will be taxable as part of your salary. It will be exempt only if the funds are used for certain medical treatments or if the amount is less than Rs 20,000.
Get a loan based on your social status
When you need money urgently – here’s a unique way to raise it! On www.vote4cash.in, you can avail cash loans without the hassles of documentations, guarantees and delays – based on your ‘social status’. It is a P2P marketplace where small investors can lend money to borrowers (approved members) seeking short term personal loans and leverage on their savings. All you have to do is fill a form, they’ll perform a small check, and you’ll become an approved member! Interest rates and terms vary!
Cash withdrawal on a credit card
A credit card can be used to withdraw money instantaneously from an ATM, the amount, on an average, being equivalent to 40-80% of your card limit. However, there might be a cap on daily cash withdrawal. Most banks will allow you to over-extend your limit on a case-to-case basis. The interest rates average from 2-5% a month.
Advantage: Instant cash – available at any hour and at any place.
Downside: Be ready to cough up an over-limit fee over and above the usual interest rate on cash advance. A few banks also levy a 2-3% transaction fee.
Loan against gold
You can get 60% of the value of your gold and can borrow from Rs 10,000 to Rs 25 lakhs on an average. The tenure is usually 6 months or 12 months but you can renew the loan at a nominal charge. While you can repay part of the loan whenever you want, gold you have pledged as collateral is released only after you repay the entire loan. The interest rates average from 10-27%.
Advantage: You can get funds in your bank account within a day.
Downside: It bears gold appraisal charges which can sometimes be a hefty amount.
You can get a loan within 30 minutes to 3 days, depending on your relationship with the bank. In fact, you might already have a preapproved loan in your name from your bank which will make the process faster. The interest rates average from 15-36%.
Advantage: Quick disbursement if you borrow from your own bank, and you share good relations.
Downside: High interest rate and processing fee of 2-3%. You will also have to pay GST on EMIs. For prepayment, a foreclosure fee of 2.5% of the outstanding amount is charged.
However, don’t replace these options for maintaining an emergency fund.