4 Financial Emergencies That a Personal Loan Can Rescue You From
Written by
Sarah Sharkey
Edited by
Jenna Klaverweiden
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A financial emergency can put your world into a tailspin. Generally, these emergencies involve unexpected expenses with bills that must be paid immediately. And, unfortunately, the costs of an emergency can add up quickly.
If you don’t have the money on hand to cover the costs, turning to a personal loan could make sense. Generally, personal loans come with lower interest rates than other quick funding sources, like credit cards. Once you commit to a personal loan, you’ll make fixed monthly payments to repay it, which can be more manageable than coming up with the funds you need upfront.
Here’s a look at some of the financial emergencies that might require turning to a personal loan.
Major Car Repair
If you hear a dreaded noise rattling around your car or it simply won’t start, a trip to the mechanic could cost you. While everyone hopes for a simple fix, car repair bills can easily cost several hundred dollars. Without an emergency fund on hand, getting back on the road could be a challenge.
In some cases, turning to a personal loan could help you get the funds you need to cover the repair. For many, fixing their vehicle is not negotiable because that’s how they commute to their job.
Required Home Repairs
If you are a homeowner, you’ll likely find out that home repairs seem to pop up at the most inconvenient times. Although you can see some repairs coming, others appear out of the blue. For example, a burst pipe or a completely broken air conditioning unit might be difficult to anticipate.
When you don’t have savings for this repair bill, personal loans could help you cover the upfront costs.
Emergency Travel Costs
While taking a vacation wouldn’t fall under emergency travel costs, traveling across the country for a pressing, unexpected reason could lead to an expensive bill. For example, you might find yourself racing across the country to say goodbye to a loved one in person or making a trip to a nearby state to pick up your long-lost dog.
Whatever emergency reason you find yourself traveling for, it’s likely that the costs will add up quickly.
Death of a Loved One
Losing a loved one comes with all kinds of emotional consequences. But for many, the financial consequences compound the misery.
A funeral can cost thousands of dollars, usually ranging from $7,000 to $12,000, per Lincoln Heritage. If your loved one didn’t leave behind funds for the funeral, you’ll likely need to come up with the cash quickly.
Additionally, if you lost your partner, you might find yourself suddenly faced with significantly higher housing costs because you aren’t splitting the rent or mortgage anymore.
While a personal loan won’t solve a long-term cash flow issue, it could give you the space you need to make changes at your own pace.
Key Takeaways
Without a robust emergency fund, you might be one financial emergency away from significant debt. If you aren’t facing an immediate financial emergency, consider building an emergency fund as soon as possible.
Generally, experts recommend tucking between three and six months’ worth of expenses into your emergency fund. Hopefully, this cushion can protect you from taking out debt when life throws you a curveball. But if not, a personal loan could be a good option.
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