Emergency Loans

Rather than opting for the first loan you find, shop around with several lenders to find the best one for you. Here are some important factors to consider when choosing an emergency personal loan:

• Interest rates: Look for a loan with the lowest rates so you can pay the minimal amount of interest. Taking the time to shop around for a low rate could save you a significant amount of money over the life of your loan.
• APRs: Your loan’s APR includes your interest rate, as well as any associated fees. Since it’s a more inclusive measure of your loan costs, you can use it to compare different loan offers on an apples-to-apples basis.
• Time to funding: Chances are you need a fast loan, so find out how long it will take the lender to deposit money into your account. Some lenders can send you your loan the same day you apply, whereas others will take days or even weeks to process your application.
• Repayment terms: The amount of time you have to repay your loan will have a big impact on your monthly payment. A longer term will have lower monthly payments, while a shorter one will have higher monthly bills. Think about how fast you want to pay back your loan, what monthly payment you can afford and what terms the lender offers. If you’re borrowing a small loan, some lenders may only give you a few months to pay it back.
• Penalties and fees: Take a look at any fees associated with the loan, such as a disbursement or late payment fee. Some lenders subtract the disbursement fee from your loan amount, so you might need to request a higher amount than you actually need to take this fee into account.
• Qualification requirements: Finally, consider what criteria you need to meet to borrow the loan. Although most lenders don’t advertise a specific credit score, some will indicate how strong your score needs to be to qualify. In most cases, your credit has a big impact on your ability to qualify and what rate you get.

Every lender sets its own rates and terms, so it’s worth comparing several offers so you can find the best one for you.

Here are some answers to the most frequently asked questions about emergency loans and how they work, specifically:

How do emergency loans work?

Emergency loans are typically unsecured personal loans that you can access fast. You can usually get the funds in your account a day or two after you get approved for the loan. Some lenders can even disburse the money the same day you apply.

Unsecured emergency loans don’t require you to put up any collateral. You don’t have to worry about losing your assets, such as your car or home, if you can’t afford to pay back the loan. However, failing to repay it can tank your credit score.

Lenders will look at your credit and income to determine whether you qualify for a loan. Borrowers with good to excellent credit will qualify for the lowest rates. It’s a good idea to shop around and compare your options so you can find a loan with the most attractive terms.

How do I get an emergency loan with bad credit?

It’s a stressful place to be if you need emergency cash but don’t have strong enough credit to qualify for a loan. Bad or poor credit, by the way, usually refers to a credit score between 300 and 579, as defined by FICO. Some lenders require an even higher score to approve you for a loan.

Fortunately, there are a few steps you can take to improve your chances of getting an emergency personal loan:

• Try applying with a cosigner. Some lenders will let you add a cosigner to your application to boost your chances of qualifying. Your cosigner becomes equally responsible for the loan, meaning their credit could get damaged if you don’t make on-time payments. But if your cosigner has good credit, they could make up for your poor score and help you qualify.
• Pursue a secured loan. Some lenders offer secured emergency loans, which require you to put up an asset as collateral, such as your home, car or investments. Putting up collateral makes you a less risky candidate for a loan in the eyes of the lender. However, doing so is riskier for you, as it means the bank could seize your assets if you fail to pay back your loan.
• Explore credit unions. Credit unions are sometimes more flexible than traditional banks when evaluating candidates for a loan. It’s worth checking with a local or online credit union to find out if it offers any options for borrowers with subpar credit.

While you might be able to find a payday loan without a credit requirement, we urge you to be careful. Payday loans can have sky-high interest rates that are well above the threshold considered to be affordable for borrowers.

Where can I find emergency loans?

We recommend three types of lenders for emergency loans: banks, online lenders and credit unions.

• Banks: If you belong to a bank, it could be worth checking with the institution to see if it offers emergency loans. Some banks offer special relationship discounts to banking customers. However, banks aren’t always the fastest when it comes to disbursing loans.
• Online lenders: Thanks to their online model, online lenders tend to be fast when processing loan applications and disbursing funds. Unlike most banks and credit unions, you usually don’t have to be a member or current customer to borrow from an online lender. Plus, many let you prequalify online, meaning you can check your rates with no commitment or impact on your credit score. Just make sure you’re looking at a reputable lender with a secure website before sharing any sensitive information.
• Credit unions: Credit unions often offer low rates and flexible terms, but you might have to meet certain membership requirements before you can apply.

As mentioned, you might also be able to get an emergency loan from a payday lender or your credit card issuer. However, going this route could leave you with high interest rates and fees that are burdensome and difficult to pay back.

What are the different types of emergency loans?

We recommend unsecured personal loans to cover your emergency expenses, but there are other types of emergency loans, too. Here are various types of emergency loans, so you understand your options:

• Personal loans: These are installment loans that you pay off over a set period of time. Strong credit borrowers might be able to get low interest rates in the single digits. You can typically find unsecured personal loans, but some lenders might also offer secured personal loans that are backed up by a personal asset as collateral.
• Payday loans: These are usually small-amount loans that come with a high interest rate. In fact, the rate can be 400% or higher. You can often get fast cash, but you’ll likely need to pay it back quickly as well. We recommend avoiding payday loans, because they can be extremely expensive and can trap borrowers in a cycle of debt.
• Title loans: These are a type of secured loan where the lender takes the title to your car until you pay back your loan. If you are unable to repay the loan, the lender can seize your car. We also recommend avoiding title loans if you can, since they tend to come with high interest rates and involve risking your vehicle.
• Pawn shop loans: You might be able to get a loan from a pawn shop if you leave something valuable behind. Like a title loan, a pawn shop loan can be expensive and you risk losing something of value.
• Credit card advances: You might be able to get an advance from your credit card if you have available credit. You might have to pay back this advance at an even higher interest rate than you usually have, as well as have to pay cash advance fees.

How fast can I get an emergency loan?

Some lenders disburse fast loans, depositing the money in your account the same day you apply. Others take one to two days to process your application, while slower institutions can take a few weeks to process everything. When comparing lenders, find out how long it will take to get your loan.

Will an emergency loan impact my credit?

Applying for an emergency loan can slightly ding your credit, as does applying for any loan. However, some lenders let you prequalify online with no impact on your score, allowing you to shop around before committing to a loan. Making on-time payments can improve your credit score, while late payments will damage it.

How do I apply for an emergency loan?

To apply for an emergency personal loan, take the following steps:

• Fill out an online form on LendingTree
• Compare up to five loan offers from lenders, including interest rates and repayment timelines
• Determine a monthly payment amount that works based on your financial obligations
• Choose the best loan and repayment plan for you
• Accept the personal loan funds

Before taking on debt, it’s worth weighing all your options. Here are a few alternatives to consider before applying for an emergency loan:

• Borrow from friends or family: If you’re in need of cash, it could be worth asking your inner circle for help. Just make sure that everyone involved is clear on the expectations around borrowing and paying back the money.
• Open a credit card with a zero-interest promotional period: Some credit cards offer zero-interest periods for a year or more to new account holders. If you can pay off your charges before this promo period ends, you’ll essentially be borrowing a zero-interest loan. However, if you can’t pay it all off, you’ll have to pay interest charges. Note that these credit cards are usually reserved for borrowers with strong credit.
• Take out a home equity loan or home equity line of credit (HELOC): Are you a homeowner? You might be able to borrow against your equity with a loan or line of credit. These loans tend to come with low interest rates, but you are using your home as collateral.
• Ask your employer for a paycheck advance. Your employer might be able to pay you ahead of schedule to help you through a tough time.
• Ask about hardship programs. If you’re struggling to pay off loans, your lenders might grant you temporary forbearance. With this pause in payments, you might free up enough cash to cover your emergency expenses.
• Medical repayment plans: If you’re dealing with medical bills, the hospital might be able to set you up on a gradual repayment plan. With a repayment plan, you can pay off the expenses over time rather than all at once upfront.

Once you’ve dealt with your emergency expense, it’s worth planning ahead for your next unexpected expense. Set a goal of building an emergency fund so you’ll be prepared for surprise costs in the future.

Here are some strategies that will help:

• Figure out a savings goal. Whether it’s $500 or $5,000, setting a goal will give you something to work toward. If you set a deadline, you can also know exactly how much you need to save each month to achieve your goal.
• Create a realistic budget. Take some time to record how much money you need each month to cover your rent or mortgage, car payments and other recurring expenses. You might find areas where you’re spending beyond your means and can cut back to meet your savings goal.
• Keep track of your spending. Once you have your budget in place, record your spending to make sure you’re staying on track. A budget-tracking app can take care of the legwork for you.
• Set up automatic transfers into a savings account. Consider creating a separate savings account and automatically transferring a certain amount from each paycheck. This way you can set it and forget it; your savings will grow without any additional effort from you.
• Put any windfalls you receive directly into your savings. If you get cash as a birthday present, bonus at work or other windfall, consider funneling it directly into your emergency fund to boost your savings.

Over time, you’ll see your emergency fund grow. When you get hit with an unexpected expense in the future, you might have cash on hand to cover it so you don’t have to turn to a loan.