Ways to avail loans for urgent needs

K. Aravind

An urgent financial need can come at any time. Unexpected hospital stay or accident may create an urgent need for money. How would you deal with such a situation effectively?

Means of loans should be sought depending on how much money is needed and when it is needed. The interest and the term of the loan should also be taken into consideration when deciding how to get a loan.

One of the quickest ways to get a loan is to withdraw money from an ATM using a credit card. Unlike other loans, you do not have to apply or wait for the loan. The convenience of getting a loan is as easy as withdrawing money from an ATM using a debit card.

Banks allow such loans up to 40 to 80 per cent of the card limit. At the same time there will be a limit to the amount of money that can be withdrawn per day. Some banks allow you to raise the limit. Credit card loans are a great way to get money anywhere, anytime. At the same time, the disadvantage is that it is a high interest rate loan. There is also a transaction fee.

The transaction fee ranges from two and a half to three per cent. The interest rates charged by various banks on credit card loans range from three to three and a half per cent per month. On an annualised basis, the interest rate ranges from 36 per cent to 42 per cent. So, even if you are sure that you can repay within one or two months, you should try to take a credit card loan only if there is no other way to get the money immediately.

Personal loan is another way to get a loan without delay. It takes 30 minutes to three days to get a loan. The better the relationship with the bank, the faster the loan will be available. Having a pre-approved loan in your name will make the loan easier. Banks often offer pre-approved loans to the best customers.

Two or three per cent processing fee should be paid. GST is applicable to EMI. Personal loan is the second highest interest rate loan after the credit card loan with an annual interest rate of 11 per cent to 20 per cent. If the loan is repaid earlier, a fee of 2.5 per cent of the remaining loan amount is payable.

Home loan borrowers also have the option of taking a top-up loan on it. Top-up loan is a special facility provided by banks if the borrower has repaid the loan on time. The top-up loan will be the equivalent of up to Rs.

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50 lakhs, which has been repaid so far in the home loan. The repayment period of the top-up loan will be the same as the term of the home loan.

Banks only grant top-up loans after a certain period of time from the date of repayment of the home loan. This is usually two to three years. Banks offer top-up loans only to those who have repaid the loan on time.

The term of the top-up loan will be the same as the term of the existing home loan. For example, if there are 10 years left to repay a home loan, the maximum repayment period for a top-up loan will be 10 years.

As there are no specific conditions regarding the utilisation of top-up loan, the amount of such loan can be utilised for any purpose. Therefore, instead of relying on high interest rate unsecured loans such as personal loans, existing home loan borrowers can opt for top-up loans.

Those in need of a large amount can mortgage their home. Gold loans are one of the most sought after items during emergencies. Loans are secured by mortgaging stocks, mutual funds and bonds. You can also take a loan by mortgaging a fixed deposit. Loans up to 75% of the deposit amount are available.