Advisors tell you to have three months worth of living expenses on hand in case of emergency. But most Canadians don’t heed this advice or can’t afford to. If you are short on cash, an online loan may be an option to consider to cover unforeseen or essential expenses.
Here are a few examples:
Funeral Expenses
Although many seniors have set aside funds for funeral expenses in their will, the death of a loved one can sometimes be unexpected. Not everyone has the foresight to set up a will or take out life insurance. The average funeral costs around $10,000 and funeral homes may want you to pay upfront or within a month of the burial ceremony or viewing. You may need extra cash quickly, and that’s where an online loan would be useful.
Car Repair
This is another example of an unexpected expense. You take your vehicle in for an oil change and discover that the brakes need replacing, your transmission is on its last legs, or you need a new set of tires. You need your car to get around, especially if you use it for business. But how to pay the mechanic? Again, an online loan would help you get your car up and running.
Home Renovations
You’ve been putting it off for years, but that old carpet simply has to go. Hardwood floors would be a better option. Maybe your air conditioner breaks down in the hot and humid days of August, or your furnace dies in the middle of a cold winter. All these things can be taken care of with an online loan. Think of it as an investment; any funds you put into your house will make the place more valuable when it’s time to move.
Pay Down More Expensive Debt
It’s easy – perhaps too easy – to put everyday items like groceries on your credit card. Before you know it, you’ve built up some serious credit card debt and the interest they charge is very high. According to Credit Cards Canada, the average interest rate for credit cards is close to 20%. Although some credit cards offer low introductory rates, a higher rate kicks in later on — often in only six months to a year. Making the monthly minimum payment won’t help you catch up. Sure, taking out an online loan is just replacing one form of debt with another, but the interest rate for online loans is often more manageable.
In the past few years, a number of online loan companies have appeared in Canada. For example, Kingston, Ont.-based SkyCap Financial offers loans of up to $10,000 with a quick and easy approval process.
It’s true that most online personal loans are based on your credit score and income and do not require any type of security or collateral. With an electronic transfer, your funds can be accessed rapidly, without the wait required by other lenders, such as the big banks.
