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The interest rates are so low that you would have to have near-perfect credit to be approved for one of their offers. Best 2020 Reviews, the personal finance review site, has been following Harrison Funding, Johnson Funding, Taft Financial, Georgetown Funding, Credit 9 and others.
Life comes with unexpected circumstances, and there seems to be one emergency or another just around the corner. Be it your car breaking down on the way to work, cell phone falling out of your hand, a medical situation or even a death in the family – emergencies are very difficult times. It can be even more challenging to manage the situation if you don’t have an emergency fund with enough money set aside to cover the bills.
More often than not, these emergency conditions can’t wait until you have saved up enough money to manage them. They require you to get cash ASAP and deal with the situation, particularly if it’s a medical issue. In such circumstances, getting an emergency loan could end up being your saving grace.
Here is everything you should know before getting an emergency loan.
Compare Debt Consolidation vs. Refinancing
What is an Emergency Debt Consolidation Loan (and Where to Get One?)
Emergency loans can be categorized under personal loans. It is a debt you take out to cover the cost of any possible emergency. The amount you apply to take out as the emergency loan depends on the total cost of the expenses you expect to incur. But, you should keep in mind that most emergency loans are limited at $2,000 or less.
Payday and title loans and even credit advances can all be considered emergency loans that provide you immediate funds to deal with the issue at hand. They are easy to acquire and offer convenience in stressful times. Unfortunately, they come with extremely high interest rates, and people are generally advised to avoid them unless left with no other option.
If you’re looking for an immediate loan to use for an emergency, do some research and try to find the best personal loans available. Consider the interest rates they offer and the terms of the loans beforehand so you won’t be caught off-guard with a hefty loan in the near future.
Credible is an excellent resource to start your emergency loan research. Using this tool, you can easily navigate your way through the different options available, compare rates of each lender and weight out the pros and cons before making your final decision.
How to Get an Emergency Debt Consolidation Loan?
Now that you know what an emergency loan is and where to find the best options with lowest interest rates let’s figure out how to get the loan.
Emergency loans are generally taken from one of these three lender entities, each having their own terms of the agreement and qualification requirements.
1. Credit Unions
Credit unions usually function in a community-based manner. They work with single borrowers to get their emergency loans approved, but you need to be a member of that credit union.
2. Banks
To get an emergency loan from a bank, the borrower general needs to have a comparatively high income. Moreover, you will need a good credit score too. These factors aren’t considered when taking out debt from a credit union or even an online lender.
3. Online Lenders
Most online lenders have all the requirements for loan qualification listen down on their website. It will help you understand your chances of getting approval before you start the application process, thus saving a significant amount of time.
P.S. Before deciding upon a lender, make sure they are reputable, trustworthy and come with good reviews to ensure a smooth loaning and repayment process for yourself.
Advantages of Taking Out an Emergency Debt Consolidation Loan
Emergency loans offer a lot of pros that you can benefit from. Some of them include:
- Flexibility – you can use the emergency loan for practically any expense, thus making highly stressful situations a lot easier to manage with the required funds. Also, based on your credit score and repayments history, you might even get an unsecured loan which is less risky.
- Various repayment options – most lenders offer various repayment terms and ways that you can return the emergency loan. You can opt for a period between 12 to 48 months, allowing you to make small repayments each month while also saving up for your own emergency fund for the future.
- Quick and easy process – when it comes to emergency loans, lenders realize the importance of a quick application process with the immediate acquisition of money to make things easier for the borrower under challenging times. The total time taken approval and releasing funds occurs in less than two days.
Disadvantages of Taking Out an Emergency Debt Consolidation Loan
As with all things, emergency loans come with a few cons too.
- Loan denial – since emergency loans are usually unsecured, this means that some lenders may take extra steps to scrutinize your income, credit history and even the current debt loan you have. People with low credit scores may end up getting declined or higher interest rates which are difficult to pay off.
- Limited money loaned – if you have a low credit score or poor repayment history, lenders may limit the amount of money they loan out to you in case of non-repayment. This limited amount is often not enough to cover your emergency expenses, especially medical bills or automobile repairs.
Some Other Options
If you find yourself unable to gain approval for an emergency loan, here are some other options you could consider applying for.
- Balance transfer credit cards – these offer debt consolidation plans with an interest credit card having an APR of 0%.
- Home equity line of credit/ home equity loan – this is only for people with equity in their homes, allowing them to enjoy a secured loan with lowered interest rates.
- Credit Card Hardship Plan
At the End
Based on the purpose behind taking out the emergency loan, some lenders may offer you extra support in the form of better terms. For example, if your need to make an immediate medical expense, lenders will often set up an interest-free repayment plan to make it easier for you to manage your finances.
You can also consider requesting a short-term loan from your trusted family members or loved ones. It will help you avoid the pressures of monthly repayments and offer increased flexibility and lax. However, be sure to plan out a quick repayment solution to ensure you don’t jeopardize your relationship with them.