(This article was originally published on the 6th July 2019 and updated on the 2nd April 2020).
Sometimes things happen unexpectedly. Everyone of us has experienced at some point had to deal with a financial emergency, whether it is an unexpected medical bill, a home emergency or a major car repair. Just like the recent COVID-19 pandemic, many might lose their jobs or face difficulties in coping with the current sluggish economic situation.
The best way to handle this is by using emergency funds you have already saved (check out our previous article on how to build an emergency fund). But what if you haven’t saved enough yet to pay for the emergency bills? Don’t worry, we have put together 5 tips that you can follow to address your pressing financial needs.
1. Don’t Panic – Understand the Situation First
Do not let your emotions take control of the situation and end up making the wrong decision that will cause more damage in the long term. Stay calm, think rationally and evaluate the situation carefully first.
Try to ask yourself these few questions beforehand. i) What has caused this emergency? ii) When do you need to have the money? iii) What is the exact amount of cash needed? By evaluating your financial situation would help you to decide on the best course of action.
2. Cut Down on Expenses Quickly
Go through all of your expenses. Identify those that are non-essential and cut down or delay spending on the items. This will help you to save the money you need to fund the emergency.
For example, if you have plans to take a holiday, want to buy the latest mobile phone or considering to subscribe to premium gym/movie channels, then those expenses can be cancelled or delayed without causing any inconvenience to your life.
3. Seek Help from Friends and Family
While you may be embarrassed to ask for money from your friends and family, a little help from the people closest to you is what you might need to get you through the situation. They will most likely lend you the money without terms and conditions or high-interest rate.
The downside to seeking help from friends and family is that because they are close to you, things might become a little complicated as it involves money. Consider this option carefully and see if it is a good decision for you.
4. Get a Fast but Safe & Affordable Loan
If you do not want to involve your friends and family, you can apply for a personal loan from a financial institution quickly. Especially if you have maintained a good credit history. Just borrow what you need and what you can afford. Set the term for as short as you can in order to reduce the interest that you will have to pay.
If you are a civil servant, you can apply for a loan from Yayasan Ihsan Rakyat or Yayasan Dewan Perniagaan Melayu Perlis, where you can receive the loan as fast as two working days. Most importantly it is safe and Syariah compliant, with funding from RCE Marketing Sdn. Bhd., a subsidiary company of RCE Capital Berhad which is a Bursa Malaysia listed company. But don’t worry, applicants with low income or less than positive CCRIS/CTOS credit history do still have the chance to apply. This gives the applicants a much sought-after sigh of relief.
5. Avoid a Loan that is Too Good to Be True
Many loan scammers take advantage of people’s vulnerability, especially when the borrower is in distress. Hence, we would advise you to stay calm and assess if the loan offer makes sense or not.
Don’t even think of going to unlicensed moneylenders who promise immediate cash but will rip you off with their exorbitant interest rates. Be careful of loan agents who offer too-good-to-be-true features, such as interest rates as low as 3.99% and close to a 100% pay-out and doesn’t look at your credit history at all. Check out our article on 6 warning signs that the loan is a scam.
Plan for the Next Financial Emergency
Once you have been through a difficult time, don’t just think that another emergency won’t happen again. Start planning now. Start to build your emergency fund so that you can have a peace of mind when you have to pay for an unexpected expense. Get your finances in order and consider taking out insurance which you can claim for medical expenses or for your car or house.
This article is prepared by Direct Lending, an online personal lending platform that assist borrowers to search, compare, apply and receive financing that best suit them in a fast, simple, safe and affordable manner. We offer Bank & Koperasi Loans with interest rates as low as 3.90% and as fast as 2 working days. Apply with us for free today.
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