Key takeaways

  • You can get funds within one business day with some types of emergency loans.
  • Payday loans or car title loans may be your only emergency loan choice if you can’t qualify based on your credit.
  • Even if you’re in a hurry, make sure you compare each lender and loan option to make sure you’re getting the best rate and terms for your credit situation.

Many U.S. adults end up searching for an emergency loan if an unexpected cost comes up because they don’t have enough savings to pay for it. A Bankrate survey found that over half of U.S. adults— 57 percent — wouldn’t be able to cover $1,000 emergency expenses using their savings.

Emergency loans can give you quick cash to pay for the unexpected. Learn the pros and cons of working with different types of lenders and compare emergency loan options to find one that can give you financial relief in a bind.

What are emergency loans?

Emergency loans are a type of personal loan that borrowers can use following a crisis of some sort, such as medical bills or important home repairs. They tend to be small and are funded within days.

How to get an emergency loan in 5 steps

The stress of an emergency in your life can make it difficult to make an informed loan decision. You may be dealing with doctors in a hospital emergency, insurance companies after a car accident or living in a hotel because your air conditioning died in the middle of summer.

Regardless of the circumstance, there are five steps you can take to help you choose the right emergency loan for you.

1. Decide if you need a fast emergency loan

Examples of situations that require fast emergency cash include paying for a major car repair to get your vehicle back, a deductible to get admitted to urgent care or a roof repair company upfront. In other words, circumstances that demand cash immediately.

However, you may have some breathing room to shop around for more emergency loan options at lower rates or better terms if, for example, you have time to plan for urgently needed surgery or dental work, or your insurance covers a rental to get you to work while your car’s being repaired after an accident.

2. Compare loan types and lenders

Always compare rates and terms offered by at least three different companies once you’ve determined which emergency loan type is best for your situation. The right emergency lender for you depends on your financial situation and how quickly you need the money.

Emergency loan types

There are several types of emergency loans available. Each has its pros and cons, and some may be a better fit for your situation and finances than others.

If you need money sooner than later to fund your emergency bills, personal loans, payday loans, credit card cash advances and title loans may be the fastest path to the urgent cash you need. You can also consider a home equity loan or HELOC if your cash needs are not as time sensitive.

Bankrate insight

Watch out for predatory features like prepayment penalties, upfront fees or exorbitantly high-interest rates. If you feel pressured to take a lender offer or don’t understand the loan terms, find another lender.

3. Get prequalified

Most emergency lenders will prequalify based on the information you provide them when you start shopping around. The key to getting the best loan for you will depend on several factors.

Credit score

Your credit score is used as your measure of risk to lenders for personal loans, home equity products and credit cards. If your credit score falls on the lower end, you may need to shop for loans offered by fair and poor credit lenders. You may need to settle for payday loans or title loans if you need a no-credit qualifying loan.

Depending on the type of loan you get you may also see a temporary drop in your credit score due to a hard credit check. But consistent, on-time and in-full payments will help boost your credit score as long as the lender reports to one or more of the three main credit bureaus.

Repayment terms

Choose the shortest repayment term you can comfortably afford so a one-time emergency doesn’t turn into a long-term debt payment. The faster you can pay the balance off, the less interest you’ll pay in the long run.

Payday loans typically require the shortest repayment, usually within 14 days, while home equity loans may be available with terms as long as 30 years. Personal loan terms range between one and seven years.

Interest rates

HELOC and home equity loan rates are typically lower than other emergency loans. Personal loan rates can be as low as around 7 percent for excellent credit borrowers and up to 36 percent for bad credit.

Payday and title loan rates are extremely high because the loans aren’t based on your creditworthiness in most cases. When shopping for an emergency loan pay close attention to APR to lock in the most competitive rate.

Bankrate insight

Pick an emergency loan payment that fits into your budget. Consider a longer term if you’re already living paycheck to paycheck. You can usually pay the balance down faster if you have the extra funds available in the future.

4. Fill out the application

When you select the best emergency loan lender, you’ll need to complete an application and provide any documents needed once you’re approved. You may need documents like pay stubs, proof of address and your driver’s license for a personal loan.

A new HELOC or home equity loan may require the same documents you needed when you bought your home, including assets, tax returns and possibly even a home appraisal. Provide documents as quickly as possible to get your cash in the shortest amount of time.

5. Wait for a decision and funding

The time to get your decision and funding will depend on the type of loan you take out. Funding is usually directly deposited into your bank account with automatic payments set up for future payments.

Loan type Time to funding
Personal loan, payday loan, title loan 1-7 business days
Credit card cash advance Instant
Home equity loan, HELOC Up to 45 days

Where to get an emergency loan

A number of different financial institutions offer emergency loans. The right one for you may vary depending on when, where and how your emergency situation happens.

Online lenders

Securing an emergency personal loan online is fairly simple and likely only requires you to fill out some personal information from the comfort of your home. Taking out your loan online will also allow you to compare different loan options all at once, and they may be available during hours when most banks are closed.

What to look out for

The standout feature of getting an emergency loan from an online lender comes down to the speed of funding. If you find yourself in a precarious financial situation and need money as soon as possible, an online lender is your best bet.

Payday lenders

You can find payday lenders online or in local strip malls in most areas. The applications usually only require proof of employment and how often you’re paid. With interest rates in the triple digits and high fees that are difficult to understand, they should only be considered a last resort.

What to look out for

Many states restrict this type of lending because it often hurts more people than it helps. If this no-credit loan is the only way you can pay an urgent expense, do everything possible to pay it off when it’s due and search for other funding options when your circumstances aren’t as dire.

Car title lenders

Just like payday loans, car title loans don’t require a credit check, and you can get the funds quickly with basic information about your vehicle. However, these loans tend to have extremely high interest rates and fees.

What to look out for

Make sure to exhaust all other options, including borrowing money from friends or family, before pursuing this route. Car title loans’ combination of high interest rates and short repayment terms increases your likelihood of defaulting on the loan and having your car repossessed.

Banks

Your local bank may offer you an emergency loan at more competitive rates and better terms if you have a longstanding relationship. However, if you have bad credit, banks may not be willing to lend you money since they tend to set more stringent credit requirements.

What to look out for

The main benefit of borrowing from a bank is knowing who you’re borrowing from in a face-to-face setting. They may offer in-person assistance to help you with additional financial advice so you don’t need to borrow money for emergencies in the future.

Credit unions

Like banks, credit unions are typically established institutions that will offer you fair terms and interest rates on money you borrow. They may also offer very fast turn times for HELOCs and home equity loans. However, credit unions may be a better option than banks for those with less-than-perfect credit, as they tend to have more lenient credit and income requirements.

What to look out for

Credit unions tend to offer competitive rates and terms for their members, even if your credit isn’t in mint condition. But, like banks, funding timelines may be longer compared to online lenders. Additionally, you’ll need to be a member of the institution in order to apply for a loan, which could delay access to the funds you need in a crunch.

What can you use an emergency loan for?

There typically aren’t rules for what you can use emergency loan funds to pay for. They function like other personal loans, except they are branded for emergencies because of how quickly you can get the funds.

They appeal to people without emergency savings and are often used to pay for unexpected car repairs, medical costs or household expenses.

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