How are your savings shaping up? Would they be able to handle an unexpected trip to the emergency room or the cost of a tow truck after your car breaks down without warning?
If you’re like 27 percent of Americans, you would be at a loss for how you pay for these items.
So what are you supposed to when you have no cash to cover a pressing bill? From a line of credit to negotiating your bills, here are some possible solutions when you need to borrow money.
Get a Personal Line of Credit
A personal line of credit is a flexible option offered by financial institutions when you need help covering an unexpected emergency expense.
If approved, you’ll receive a credit limit. This is the maximum amount of cash you can borrow at any time, but it’s not the minimum. Financial institutions like CreditFresh let you use as much or as little of your limit at your discretion. To find out what these limits may be, you’ll have to check out CreditFresh.com and compare them to other line of credit loans.
You may use the entire thing all at once or dip into it over several months. With a personal line of credit, you only accrue interest on what you use. This interest joins your principal to make a balance owing. Once you pay off your balance, you have your full limit available again to use as you like.
Compare this to certain other loans and you’ll see why this may be a more flexible option. Interest starts accruing on the average loan as soon as you borrow the money, and you’ll have to pay back all of it over a set period. Once you do, you’ll have to reapply if you need more money.
Learn to Negotiate
When it comes to an unexpected bill, size matters. While you may be able to cover a small expense on your own, a large expense — or several small expenses — may be a lot harder to cover.
As the price tag goes up, you’ll need more time to collect the cash you need. You may have to wait for several paydays to come and go before you’re ready.
Ordinarily, this waiting game won’t work. But it could if you speak with your creditor.
Some companies may offer a deferred payment plan that breaks down what you owe over several installments. By having a frank discussion about your finances, you may be able to avoid late penalties while you pay back what you owe over a longer period.
Brush up on your negotiation skills even if you decide to get a personal line of credit. A financing plan may offset how much you need to put on credit. You may even be able to reduce what you owe.
There’s no doubt you’ll be stressed if you face down an emergency without savings, but knowing you have options can help alleviate some of your worries. Whatever you do, don’t sit on your bill until the due date passes. Talk to your creditors and consider opening a line of credit. These options may help you avoid late fees while you solve your emergency.