Financial emergencies are inevitable. Whether your car needs repairs or you’re facing an untimely medical situation, unforeseen expenses come for us all. Unfortunately, a report by the US Federal Reserve found that 40% of Americans don’t have $400 to cover an emergency right away. If you’re part of the 40% but need funds quickly — fear not, as we’ve compiled a list of alternatives you can consider if you’re strapped for cash during emergency situations.
Make money from your car
Before considering selling your car, there is another way you can use your car to get money: Title Loans. With title loans, you’re essentially using your car as collateral to get a loan, but the process is fast and requires just a few documents. LoanMart explains that title loans can be secured with just your vehicle title, while eligibility and the loan amount will be based off your ability to repay and the equity you have in your vehicle. While this means you could lose your car if you default on payments, it’s still a quick way to get cash for your emergency — and you get to keep your car.
Use your credit card and take out a cash advance
If you’ve got a credit card, use this to take out something similar to a short-term loan. Fortunately, most credit cards offer this through ATMs or bank withdrawals/checks. The only downsides are that you’ll probably be charged a transaction fee, and that the interest rates for these are higher than other options. Not to mention, the APR for a credit card cash advance is typically higher than your card’s usual APR, so make sure that if you choose this option, you’re armed with a timely repayment plan to avoid accruing a high amount of interest.
Loan from your retirement account
If you prefer to use what is technically your money, you can take a loan out from your 401(k) or IRA. Borrowing from it won’t impact your credit score, and interest rates are fairly low, but the downside is that you may be required to pay it back within a certain window of time or risk facing penalties. AJ Smith of Credit also notes that it could be considered a withdrawal if you leave your job, so make sure you steer clear of this option if you plan to quit any time soon.
Sell or pawn items
If you’ve got some high-value items, you can either sell them or pawn them with the intention of getting them back. While both are completely reasonable options, both have their pros and cons. Selling may take a little more time, as you’ll have to set up an account on online platforms, take photos, and wait for buyers. On the bright side, it’s easy to do, and something you can do while looking for other options. However, if you prefer to keep your items, pawn them instead — it’s faster and easier. While most pawn shop loans are a month at best, some can offer extensions that stretch to several months. The only downsides are the high interest rates you’ll have to pay, but at least you’ll get your items back.
If you’ve decided to take out a loan, paying it back should be your first order of business — our article entitled ‘How To Manage Your Way Out Of Debt’ recommends drawing up a personal budget and cutting out the nonessentials. Of course, to stay out of situations like the aforementioned and avoiding having to get into debt or selling your items in the first place, nothing beats building an emergency fund. Factor it in to your future budget and make sure you remain consistent with it, so that should you ever be in an emergency situation again, you’ll be better prepared.