An unexpected expense can catch you off-guard. Since these financial obligations are unforeseen, they can strain your budget and disrupt your daily spending plans. Whether it’s a sudden household, medical, auto, or other unexpected expenses, dealing with them can be stressful, especially if you don’t have a plan and are facing a financial crunch. Discussed below is how to cover an unexpected expense.
1. Apply for a payday loan
Many unexpected expenses may require immediate attention, which can make them difficult to cater to, particularly if they weren’t included in your monthly budget. This is where payday loans come in. These unsecured, short-term loans are suitable for emergencies because they’re easy to access, and the application process is simple. Payday loans, such as ODSP payday loans, often have less strict acceptance criteria than other forms of borrowing, making them easy to qualify for.
Unlike traditional loan providers, most payday lenders approve your loan even if you have poor credit or no credit history. This makes payday borrowing accessible to everyone, which is helpful, particularly in a financial crisis. Payday loans don’t require collateral, meaning you don’t have to risk any personal asset to access cash. Also, there’s no restriction on what you can use the cash on.
2. Leverage your emergency fund savings
Building an emergency fund is an excellent way to plan for unexpected future expenses, which is key to attaining peace of mind and financial stability. Your emergency fund acts as a safety net in times of sudden financial needs such as:
- Car breakdowns
- Medical bills
- Home repairs
- Funeral expenses
- Job loss
- Natural disasters
- Pet medical emergencies and more
If you don’t have an emergency fund, start building one by setting aside a specific amount from your monthly budget solely for this purpose. You can automate contributions to your emergency fund to ensure consistent savings over time.
3. Get a salary advance
A salary advance is a short-term borrowing available to salaried employees to help them deal with emergency needs and is deducted from future paychecks. These loans are a lifesaver and can come in handy when dealing with:
- Unforeseen medical emergencies that require immediate attention
- Last-minute travel plans for a family or business emergency
- Sudden, expensive auto repairs
Before seeking a salary advance, familiarize yourself with the borrowing requirements, fees associated with the loan, and repayment terms to determine if this financial option resonates with your financial needs.
4. Home equity loans
Home equity loans come in handy for eligible homeowners when dealing with unexpected expenses. They have competitive interest rates and are secured by your home’s value, meaning you can qualify for rates lower than those associated with personal loans and credit cards, particularly if you have good credit. You can access home equity for financial emergencies in various ways, including:
- Shared equity agreement: In this option, an equity investment company buys a portion of your homeownership and pays you for it in cash in return for the right to cash in on your property’s appreciated value in the future
- Home equity line of credit (HELOC): It lets you withdraw flexible amounts over a predetermined period
- Cash-out refinance: It’s a mortgage that lets you replace the current home loan with a bigger loan so you can get the difference in cash. The mortgage depends on your home equity’s value
Endnote
Catering to sudden expenses can be challenging, especially if you hadn’t planned for them. Familiarize yourself with the options you can leverage to cover an unexpected expense.
