Most people at some stage or another need a helping hand financially. Whether it’s to tide you over in an emergency or to cover an unexpected expense, there may come a time when you need to borrow money. No matter how much money we save, or how frugal we are, sometimes our regular household income won’t be enough to cover fluctuating outgoing expenses. If your financial need is immediate, a short term loan can help you to resolve your situation in a quick and timely manner.
To avoid the pitfalls of emergency loans and payday loans, you need to know how to borrow sensibly. At Scotcash, we provide affordable credit, financial support and guidance to help you make informed decisions so you can make the most of your money.
What are emergency loans?
Emergency loans, also referred to as ‘crisis loans’, provide quick emergency money for unexpected but necessary expenses. They are a type of short term loan whereby money is transferred to your account immediately with an average repayment period of 3 months to 5 years. While the average maximum emergency loan available is £800, amounts can be between £100 and £10,000.
Understanding emergency loans
Choosing what loan is best for you is determined by your financial obligations. Emergency loans, for example, describe how the loans are typically used to cover an immediate financial need. While you may be able to secure another loan or the necessary credit from a traditional lender, the time it takes to process these types of loans may not be practical nor feasible for your situation.
Emergency loans are one option to help you avoid a lengthy loan process. They are often used when a financial burden needs to be paid quickly. With short processing times and cash being sent to your bank within minutes, emergency loans offer a quick-fix solution for anyone who needs a short term loan in a hurry.
Why you might consider an emergency loan
Emergency loans are provided to cover the needs of consumers in financial crises. Designed specifically for unforeseen financial strain, some of the common reasons why someone may seek out an emergency loan include:
- Emergency loans for car repairs
- Emergency home repair loans
- Emergency costs for travel and journeys
- To cover an emergency debt
- Emergency business loans
Am I eligible for an emergency loan?
As with all lenders, emergency loans follow certain restrictions and guidelines. When applying for an emergency loan the lender will run a search of your credit file to assess your application. This is to ensure that you can afford the loan amount and the repayment terms that you have applied for.
This process is a requirement for Financial Conduct Authority Authorised direct lenders. Always check if a lender is registered with the FCA first and if a company does not run a credit check, consider this a red flag.
You can however still get emergency loans for bad credit, in fact, some emergency loan lenders are more likely to lend to those with bad credit than banks or traditional loan providers will be. This is because accepting bad credit applicants allows for high APRs. If a borrower defaults on their loan the emergency loan company covers those losses and will charge higher interest rates to their borrowers to make up the difference.
Receiving emergency loans on benefits or universal credit is also possible. Some lenders are willing to accept certain benefits as a regular form of income.
With such high APRs (11.8% to as high as 1625.5%) it’s important that you only accept an emergency loan if you are confident you can pay it back in time. Be careful to research the company beforehand to ensure it is legitimate, some loan brokers will appear to be emergency loan direct lenders but they cannot lend to you directly. Loan brokers will take a fee and refer your application to an emergency loan lender making the whole process more costly for you.
What you need to know if you’re considering emergency cash loans:
Interest rates can vary
Emergency loan lenders often have very large interest rate ranges, what you get offered may way surpass what you would pay on a credit card or with a more ethical lender, like Scotcash.
Your loan amount is not guaranteed
Emergency loan lenders will often advertise themselves as offering up to a certain amount, but that does not guarantee that everyone will be accepted for the maximum amount or even the amount they selected.
The processing time of your emergency loan
Typically the processing time for emergency loans is shorter than other short term loans. Most lenders will have the money deposited into your account after 1-2 business days. Their timeframe however can depend on how long it takes to verify your information, what bank you are with and even what day the application is submitted. Often emergency loans are not as immediate as they seem, so take the time to read the small print because you may be better off with another lender.
Be mindful of fine print as there may be hidden fees like an application fee, prepayment fee or even an origination fee. Take the time to read consumer reviews and payment terms so as to avoid predatory lenders.
Whether you can meet payment deadlines
If you know you can’t repay on time, or if you are taking out a loan to cover the charges on a previous loan, you should avoid emergency loans at all costs. Emergency loans are an expensive form of borrowing and late repayments can cause you serious money problems. If you need financial advice or require a more flexible repayment plan our team of advisors are always on hand to help.
Why choose Scotcash
At Scotcash we provide peace of mind, we can help when traditional sources such as banks and building societies cannot. We serve as an ethical, affordable alternative to home credit, payday loans and emergency loans, which can often prove expensive and lead to more money problems in the long term. As an independent Community Finance Organisation, we work hard to reduce financial exclusion by increasing access to affordable loans, basic bank accounts, financial support and guidance.
When money is tight we help you to meet your financial obligations with affordable and straightforward loans. Our personal loans start from just £100 and go up to £2,000 with a maximum repayment period of 12 months.
Before lending, we work with you to determine a repayment schedule that is practical for you. With options to pay weekly, fortnightly, four-weekly or monthly our repayment plans are flexible and accessible to all. All of our loans are means-tested and we only ever lend what we know you can afford, so you know you are in safe hands with a Scotcash loan.
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We aim to help as many people as possible with our affordable loan scheme. Once we have received your application we will assess it by looking at your income and expenditure and any existing debts you may have. If you are approved, together we will decide on a repayment plan that works for you.
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Unlike some lenders, all our loans are means tested and we only lend what we know you can afford.
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