Surviving a Financial Emergency

There are all kinds of financial emergencies that can strike without warning. Cars break down, homes need repairs and medical issues can flare up, to name only a few possibilities. Being prepared for a potential emergency is a smart move, but if you're not, you still need to find a way to pay your bills. That's an area where car title loans in Fort Worth can help.

If you're going through hard times or you just want to prepare for surviving a financial emergency, this guide will cover all you need to know.

Surviving a Financial Emergency with a Title Loan

Let's say you're dealing with a financial worst-case scenario. Here's an example:

  • You have one or more bills you need to pay totaling $500 or more.
  • You live paycheck to paycheck and have little money saved.
  • Your credit score is on the low side due to some previous missteps.

That's a tough position to be in, but that's also where title loans shine. If you have a car in your name and it has a clear title with no lienholders, you can get a title loan. Your monthly income doesn't matter, and neither does your credit score. Of course, you should still make sure you'll be able to pay back what you borrow, but you at least don't need to worry about satisfying any strict lender requirements.

In Texas, there's no maximum to how much you can borrow with a title loan. Instead, the amount will depend on how much your car is worth. Here's how a lender typically calculates that:

  1. They get your car's details, including its year, make, model and mileage.
  2. They enter those details into a vehicle value guide.
  3. They inspect your car to see its condition.
  4. They compare its condition to the value listed for that condition in the value guide.

With that value, the lender can decide how much they're willing to loan you. A standard maximum loan amount is from 30 to 50 percent of your car's current market value.

Title loans have a fast application process. You can almost always get a title loan the same day that you apply for it, and in most cases, you can even get your loan money within an hour from when you enter the lender's office.

An Alternative Option for Surviving a Financial Emergency

A title loan is quick and convenient, but it's not your only solution to sudden financial troubles. You could also consider credit cards.

Credit cards are actually the best way to pay for just about anything, because they allow you to earn a return on what you spend, either in the form of reward points or cashback. If you have a rewards credit card, you may still want to put the costs of a financial emergency on it, even if you get a title loan. Then, you can simply pay your credit card bill immediately with the title loan, ensuring you earn your points or cashback.

There are a few downsides to credit cards. You can't always use them to pay, as some payments can't be made with credit cards. If you need to get a new credit card, you must apply for it, and approval will depend on your credit score and income. You'll also need to wait for the credit card to arrive before you can use it.

One option to consider is a 0-percent annual percentage rate (APR) credit card. If you pay off your balance within the introductory period, you don't pay any interest. The introductory period varies depending on the card. 12 months is common, but there are plenty of cards with longer and shorter introductory periods. Keep in mind that you must pay interest if you don't pay off the full balance by the end of that introductory period.

Proper Preparation for a Financial Emergency

Title loans and credit cards can both work in a pinch, but your best option when a financial emergency strikes is always being able to pay it with your savings. That's why it's so important to build up a solid emergency fund. The general rule with emergency funds is to have three to six months of expenses saved.

It obviously takes time to save that much money, but what's more important is getting into the habit of paying yourself first. This ensures that you're saving money every month. You may not have six months of expenses overnight, but you'll gradually reach milestones, such as $500 and $1,000, that could be the difference between covering a financial emergency with your savings and needing to go into debt when you have a sudden expense.

Final Thoughts

No matter your current situation, it's a good time to start getting ready for any financial emergencies that could come your way. If you don't already have an emergency fund, start building one and you'll be better prepared than the vast majority of people.

An emergency fund is your best bet for surviving a financial emergency. If you don't have an emergency fund or yours isn't sufficient, then you can give a credit card or a title loan a try, depending on which one better fits your needs and your financial situation.