5 Simple Ways to Handle a Financial Emergency

The possibility of a financial emergency cannot be ignored and so you need to have adequate savings or contingency plans in place to deal with it. However, many a time the savings are not adequate or the contingency plans don’t work and you need to search around for arranging the necessary funds quickly. Let us look at some options like loans against gold that can be explored to arrange for the necessary funds to handle any type of financial emergency.

Estimating the Fund Requirement is Important

The first step that will help you deal with any kind of financial emergency is to estimate the amount that you will need. Follow this up with an assessment of funds available with you and the shortfall. Once you know how much funds are needed to deal with a situation you can start exploring different options with the most common being using your fixed assets or other debt-free properties as collateral to get loans at a reasonable rate.

Exploring Fund Options

The easiest and the most convenient way to fund a medical or financial emergency is to borrow from your family or friends. But in the current scenario when expenses have risen for all, this option may not be suitable or possible. What is advisable is to take stock of your assets and see which of them can be used as collateral to get a loan from your bank or a lending agency.

• Loan Against Property - A very good option to get the necessary funds for fulfilling an emergency requirement. Lending agencies offer loans against fully constructed, residential, commercial, and leased properties on flexible terms. These loans can be sanctioned in as less as 72 hours and are highly suitable when the amount needed is high. The loan amount will depend on the valuation of the property and is generally around 50 to 60% of its market value.
• Gold Loan - Another asset that you can use to raise the necessary funds is your gold ornaments. An excellent option to manage your short-term emergency cash needs, gold loans generally come with non-jumping interest rates that stay the same throughout the loan tenure. These loans are sanctioned instantly once the gold evaluators appointed by the lender take stock of your gold and check them for their genuineness. You can get a loan of amounts ranging from Rs 10,000 to Rs 10 lakhs and repay the amount at the end of the loan tenure or prepay it if you have the funds.
• Loan Against Fixed Deposits - Another option is to approach the agency or organisation where you hold fixed deposits and seek a loan against them. You can easily get a loan of up to 75% of the value of your fixed deposit at a rate that is marginally higher than the interest rate on your deposit.
• Pre-approved Personal Loans - You can always approach your bank where you have an account or whose credit card you hold for a personal loan. These loans are sanctioned quickly based on your credit scores and ability to repay them.
• Fintech Loans - Fintech companies offer personal loans even when your credit score is less. But a major disadvantage of these loans is that they carry higher interest rates. So, opt for this route only when you are unable to arrange funds from the other options.

Gold loans in India are the easiest and simplest to get with very little documentation required by the lending agencies. You can choose from the various borrowing options depending on your urgency, the amount required and availability of assets for use as collateral.