[The following is a guest post. These programs provided in the article are specific to Australia, however similar initiatives should be available in most countries. These examples should give you an idea on what to look for in your country of residency.
Financial emergencies often occur when you least expect it and typically when you can least afford it. Perhaps you need a new washing machine, your car breaks down, or you need to make some home repairs, but you just do not have the money set aside to pay for it. While these emergencies may arise when you least expect it, they still need to be dealt with. The Australian government has set up several programs to help low-income families deal with these types of financial emergencies without the need to turn to high-interest loans and scams. Here are some ways the government can provide you with loan assistance and help you through your emergency.
No Interest Loan Scheme
These No Interest Loan Schemes, or NILS, are specifically designed for people who are receiving some type of welfare benefits. This programs offers low-income families the ability to take out a loan for up to $1,200 to offset the cost of purchasing household appliances, medical care goods, or car repairs. These are unsecured loans, but you may only have one NILS loan out at a one time. You will be required to set up payment arrangements and pay the loan back over the course of 12 to 18 months.
StepUp Loans
Unlike NILS loans, StepUp Loans are not no-interest loans, but they do offer very low-interest, unsecured loans to low-income families. You have a little more leeway about how to spend these loans and can obtain a loan for up to $3,000 to cover the expenses to purchase, new goods for you home, make home repairs, and pay for various medical treatments. Repayments will also be set up for this type of loan, but you have up to three years to pay the balance off.
AddsUp Savings Account
While this will not give you immediate money, it may provide a short-term solution to your emergency. This type of savings account is specifically designed for those who have already obtained and repaid a NILS or StepUp Loan. You must save at least $300 to be eligible, but once you reach this threshold, the government will match your savings dollar-for-dollar up to $500. This may be an options to help you save $1,000 in a relatively short period of time.
SaverPlus
Must like the AddsUp Savings Account, SaverPlus also encouraged you to set up a savings account. However, this option is available to all low-income families and not just those who have already obtained and repaid a NILS or StepUp loan. You will meet with a financial counsellor and set up a savings plan, and just like with the AddsUp Savings Account, the government will match you contributions up to $500.
Avoid Payday Loans
Even if you have to wait a little bit to receive the money you need, you should never consider taking out a payday loan or car title loan. These loans charge an incredibly high interest rate and you will spend a lot more money paying the loan back than what you actually borrowed. In fact, you are likely to go even further into debt after obtaining one of these loans. Car title loans are extremely dangerous because you could actually lose ownership of your car if you are late with just one payment. Read through any loan contract very carefully before signing anything and make sure that you can make repayments on time before taking out this type of loan.
If all else fails and you cannot take out a governmental loan or wait for funds to build up in your savings account, try several local charities. Many churches and the Salvation Army have special funds set aside to help people who are going through a financial emergency. They may be able to help you with home repairs, pay for repairs to your car or help you find a second-hand household appliance that works great. There are many options available to low-income families who are struggling with an emergency situation. Be sure to explore all of your options to see what may work best for you and your situation.