At some point in their lives, most Canadians take out a loan. In 2023, the market for loan administration and other services is worth about $1.5 billion. Since 2018, this industry has been growing by about 4.6% each year.
There are a lot of valid reasons people might need an emergency loan. On the other hand, there are also expenses that you cannot use quick cash loan funds for.
Some people hesitate to look into the possibility of getting an emergency loan because they think that one might not be appropriate for their situation. The better you understand what kind of expenses you can use an emergency loan for, the easier it will be for you to decide if a loan is the right choice for your financial situation.
Read on to learn all about what you can use emergency loans for and whether or not one might be the right choice for you!
What Can’t You Use a Fast Cash Loan For?
To start with, it can help to understand a few specific ways you cannot use emergency loans. For example, in many cases, it is not legal to use personal loans to cover college tuition.
You probably also won’t be able to get an emergency loan to help you with a down payment on your future home. Your down payment is meant to act as evidence of your ability to afford your mortgage in the long run. Taking out a loan for your down payment defeats the whole purpose of it.
In most cases, you also cannot use quick cash loans to cover business expenses. On top of that, there may be some other ways your specific lender stipulates that you cannot use fast loan funds.
On the other hand, there are plenty of expenses a fast cash loan might be perfect for.
Valid Loan Uses Include Car Repairs
If you suffer from a car accident, a fast cash loan might be a smart way to look after your financial health in the long run. Many people do not have the savings to keep their cars working after an accident.
They might rely on car problems developing slowly so that they can save money for incoming repairs. However, an accident can leave you suddenly without the means to get to and from your job. In such cases, getting a loan might be necessary so that you can continue to make money in the future.
Of course, you might be able to take care of your car damages with your insurance. It is a good idea to check if your insurance company will repair your car for you before you resort to taking out an emergency personal loan.
Even if you don’t think your insurance company will cover all of your car repair costs, it is still worth checking to see if it will cover at least some of them. If it does, you may be able to take out a smaller emergency loan.
Use Emergency Funds for Medical Expenses
In some cases, you might have some medical expenses that you cannot cover. If you make a mistake with your financial planning, you might need to buy some medicine immediately and not have the funds on hand to do so. That can be an appropriate time to use a fast cash loan.
Emergency Cash Can Cover Dental Needs
The same problem can happen with necessary dental procedures. Sometimes, people wake up in the night with tooth pain and need to receive dental care right away.
These kinds of surprise expenses can be difficult to take care of if you do not have savings put away for a rainy day.
Keep in mind that you can often pay for your dental or other expenses later. Even if you have to pay a late fee, that can sometimes be preferable to taking out a personal loan.
On the other hand, if you have a debt that is about to go to a collection agency, it can be smarter to take out a loan. If your debts go to a collection agency, they can wreak havoc on your credit score. It can take months or years to recover from a lowered credit score.
Get a Loan for Funeral Costs
It is often difficult to know when a loved one might pass on. If you are facing surprise funeral expenses, then an emergency loan might be an appropriate choice.
This goes double if the funeral turns out to cost more than you expect. Many people have no idea how expensive funerals can be, so they are not prepared when they need to pay for one.
Loans Can Make Ends Meet in Financial Emergencies
If you lose your job or source of income, then you might need an emergency loan to cover basic expenses like your groceries. You may be able to put off paying your rent and utilities, especially if you can absorb potential late fees.
However, in other cases, it is essential to pay these bills right away. In a financial emergency, a fast cash loan can sometimes save the day.
Understand the Potential Uses of an Emergency Loan
Many people are unsure if an emergency loan can help them with their specific financial needs. We hope that this article has helped you understand whether or not an emergency loan might be the right choice for your own situation. As long as you use emergency loans responsibly, they can be a powerful financial tool to help you get through difficult times.
To learn more about how you can find the best fast loans for you, reach out and get in touch with us here at any time!