When life throws unexpected financial challenges your way, whether it’s mounting medical bills, sudden unemployment, or the aftermath of a natural disaster, the need for quick cash becomes paramount. Unfortunately, most of us are ill-prepared to handle such emergencies, leaving us scrambling to find solutions. If you find yourself in this trouble, rest assured that you are not alone. Statistics from FEMA reveal that about six out of ten households encounter at least one financial emergency each year, and shockingly, one-third of those families have no savings at all.
When faced with pressing financial demands, it becomes crucial to find intelligent approaches for swiftly raising funds without jeopardizing your long-term financial stability. Here are six strategies that can come to your rescue:
1. Liquidate Your Assets
Take a close look at your possessions and consider parting ways with items that hold significant value but are rarely used. Delve into the corner of your jewellery box and evaluate whether heirlooms, vintage jewellery, or luxury watches can be sold for cash. Additionally, explore other valuables stowed away in your closet, such as formal attire or inherited items, which might fetch a fair price in the market. For electronic gadgets and media, online platforms like OLX, eBay, Swappa, Facebook Marketplace, and Craigslist can be excellent avenues to find interested buyers.
2. Fintech Startups
If you’re living in India, the rise of app-based fintech startups offers a convenient way to get quick loans with minimal hassle and swift processing based on your eligibility. Particularly popular among the younger generation seeking short-term financing solutions, digital lenders often require minimal documentation, and the entire process is conducted online. Simply fill out the loan application form, submit the necessary documents, and within 24 to 48 hours, the sanctioned loan amount will be credited to your bank account.
3. Personal Loans
Another viable option for securing quick loans during emergencies is through traditional banks and financial institutions. Personal loans are often extended to salary account holders who maintain healthy balances in their savings accounts. These loans can provide a reliable financial cushion during challenging times.
4. Gold Loan
With gold prices soaring to record highs, leveraging your gold jewellery or ornaments to secure a loan has become a practical option. A gold loan is typically processed swiftly, and the interest rates are relatively lower compared to personal loans due to its secured nature. Moreover, banks offer flexible repayment options, and you can avail up to 90% of the gold’s value as a loan.
5. Loan against Fixed Deposit (FD)
If you have a fixed deposit, it can serve as an excellent source of immediate funds in emergencies. By pledging your FD as collateral, you can obtain an instant loan with minimal hassle. The margin amount required is usually low, and banks may offer up to 90-95% of the deposit amount as the loan. Interest rates on these loans are often marginally higher than the FD rate.
6. Credit Cards
Credit cards can act as a convenient source of short-term borrowing when used judiciously. Making purchases with a credit card is akin to taking a loan from the credit card company, which pays the merchant on your behalf. For those who pay off their entire balance at the end of each month, credit cards can serve as interest-free loans. However, if you carry a balance, beware of the exorbitant interest rates, often exceeding 20% annually. Credit card companies typically offer relatively small credit limits, making them suitable for smaller emergency expenses.
In times of financial crisis, it’s crucial to weigh your options carefully and choose the most suitable approach for your specific situation. While raising quick cash is essential, it’s equally important to minimize the long-term impact on your financial stability. By exploring these smart ways to address urgent financial needs, you can navigate through difficult times with greater confidence and resilience. Remember, planning and building an emergency fund can help avoid such situations in the future, ensuring you’re better equipped to handle life’s unexpected challenges.
Tanvi Kaushik specializes in Content Marketing and works with the Digital Team at KreditBee – India’s fastest personal loan platform where self-employed and salaried professionals can easily avail of personal loans in just a few minutes when in need of quick funds. Tanvi writes to-the-point articles on personal finance and budgeting which are truly appreciated by her readers. She is committed to making money matters easy to understand even for the layman. Her commitment to her work doesn’t stop her from pursuing her hobbies of hiking, trekking and going on adventurous trips.