How to avail quick loan during an emergency- Here are five options

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New Delhi: While an emergency or unexpected circumstances may occur at any moment, very few are prepared for it. It is always advised to create a contingency fund (equivalent to six months of your monthly income). But very few have it. In the absence of an contigency fund if you come across any medical emergency such as hospitalisation, you have to fund it through a loan. Here are five options to avail a quick loan in case of an emergency. 

1. Loan Against FD 

If you have any fixed deposit (FD) then you can get an instant loan by pledging that FD in case of any emergency. It is one the best sources for meeting immediate financial needs as the margin amount is very less and one can get up to 90-95% of the deposit amount as loan. Typically banks charge 2% higher than the FD rate as interest rate on these loans.

2. Gold Loan

It is easier to get a loan against your gold jewellery or ornaments. This loan is issued within hours and interest rate on these loans is lower as compared to personal loans as it is a secured loan. Also, banks provide flexible repayment options on gold loans. One can avail up to 90% of the value of gold as loan in the present time. 

3. Loan Against Shares and Mutual Fund Units

If you do not have any FD or gold to pledge for a loan then you can avail a quick loan against shares or units of a mutual fund scheme. Lenders offer up to 50% of the value of shares and equity mutual fund units as loan. Interest rate on these loans are at par with personal loan interest rate.

4. Pre-Approved Personal Loans

This is another convenient option to avail quick loan in case of an emergency. Banks typically offer these loans to salary account holders who maintain healthy balance in their savings account. 

5. Loan against credit card limit

Some lenders also offer quick loans against credit card limit. You can avail this loan if no other option is available. In such a case your credit card limit will be reduced by the loan amount your take. Typically, the interest rate charged on these loans is higher than personal loans. It may be noted that there is an additional cost if you take loan against credit card limit. The interest you pay on such loans attract GST @ 18%.