Personal loan Vs Emergency Fund: Life sometimes passes through unknown paths. It is difficult to say which financial crisis will come and spoil your budget by bringing unwanted expenses into your life full of ups and downs. Any major illness, loss of job etc. are among such crises. In such a situation, many times, despite shortage of food, funds have to be raised for these essential expenses. For this, people resort to two types of measures. One of these is emergency fund and the other is personal loan. It is important for us to know who is better in which circumstances and which loan has better facilities in which respect.
what is emergency fund
Emergency fund is a kind of arrangement of pre-prepared funds to deal with unexpected expenses. This is a liquid account like a savings account, which you can access immediately as per your need. For this, experts ask to save an amount equal to three to six months’ income. There is no need to get approval from anyone for this amount. No interest has to be paid on this amount. Understand it in this way that if you have to spend Rs 50 thousand due to a sudden illness, then you can spend it out of this amount without worrying about the monthly expenses.
What are the benefits of personal loan?
A personal loan is money borrowed immediately from a bank. After applying in the bank, it is available immediately if everything is fine. Through this, many times the amount is received in less than 24 hours. But for this you have to pay interest. So overall an emergency fund is better. But if you need more money than your savings immediately, you may have to resort to a personal loan. But for this it is important that you keep your credit score better.
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