Kolkata, November 27: One of the basic rules of financial planning is to create an emergency fund. Emergencies do not come with any prior warning and it is always good to be prepared. However, there may be instances when you are faced with any emergency but there is no emergency fund at your disposal. While that is bad news, you can still tackle a financial challenge and when one arises. Here are the five ways to do so.
1. Dip into your investments: If you have investments you can always dip into them. For example you can redeem mutual funds or FDs. However, if the FD has not matured, you might have to pay a certain amount as penalty to the bank. Again, this is not a wise thing to do, but it might work out better than taking a loan where you have to pay very high interest.
2. Get personal loan: The good thing about a personal loan is that it is easy to get one if you have a regular income. Personal loans are easy quick to process and easily disbursed. However, personal loans are unsecured loans and hence come with a very high rate of interest which could be as high as 20 per cent. When taking a personal loan shop around for the lowest interest rates. If you have a good credit score and a relationship with your bank, you can always negotiate for a lower interest rate. Use an EMI calculator to figure out how much your EMI outgo will be every month. Remember to take an amount that you can pay back.
3. Use a credit card: A credit card is handy during emergencies. If the credit card bill is too big to pay off by the next due date, you can even convert it into EMIs. You are also eligible for loans against your credit card. However, such modes of cash are also unsecure loans and you have to pay a very high rate of interest just like personal loans.
4. Get a top-up on your home loan: If you have a home loan running and already paid a few years of interest, you can avail a top up on your home loan. Interest rates on top-up home loans are slightly higher than your home loan interest rate and thus much lower than what you would pay in case of a personal loan. Also, you can use the money for any purpose.
5. Take help from family or friends: This could lead to other issues, but in situations like these, it can also make sense to seek financial help from family and friends. One would of course need to pay the money back, but in such cases it can be done without any interest or for very minimal interest.