What is an emergency loan?
An emergency loan is a personal loan you use to pay a medical bill, get a car repaired, or cover some other emergency expense. These loans can be secured or unsecured — unsecured loans are more widely available – and can come from an online lender, credit union or bank.
Check the lender’s requirements to see if you meet them. Lenders usually have a minimum credit score and a maximum debt to income ratio requirements. Some offer co-signed or joint loans, which may be easier to qualify for.
Look for a lender who can fund your loan quickly (the fastest lenders can usually approve you the day you apply and fund the loan the next day) and who offers the loan amount you’re looking for.
Why we chose these lenders
Reached is an online lending platform that takes into account alternative data on an application, including your place of residence and education, in addition to credit and income information. The company says it funds 99% of loans within one business day of approval.
best egg says her application takes minutes to complete and loans are funded within a business day of approval in some cases. This lender offers free access to your credit score, so you can see how one-time payments benefit your score over time.
OneMain offers personal loans for borrowers with low credit scores, but they come with a high APR and origination fees. The lender says that, on average, loan applications take a day to be approved. Loans funded by ACH transfer take approximately one to two days after the loan closing date.
Universal CreditThe low minimum credit score makes it a good choice for borrowers with good or bad credit. It may take a few days for the lender to approve a loan application, but if you can wait, you’ll have access to credit-enhancing tools like credit monitoring and a credit score simulator.
Before has a low minimum credit score requirement and says he can fund a loan one business day after approval. Its annual percentage rate of charge includes administrative costs of up to 4.75%. The company reports payments to the three major credit bureaus – Experian, Equifax and TransUnion – which can help you establish credit.
LendingPoint lends to borrowers with a low credit score, but only reports to two credit bureaus. The company says approval takes minutes and funds are usually available the next day.
Timely offers small installment loans to borrowers with little or no credit history at high rates compared to other bad credit lenders. Oportun can fund loans in one to three days.
SeedFi The loans combine personal loans with credit building loans by allowing the borrower to use part of the money immediately and put the rest in a savings account. The borrower has access to the savings account once the loan has been repaid. These loans are best for someone who wants to cover an urgent expense now and build up an emergency fund for next time.
How to choose an emergency loan
Compare the total cost: Speed may be your priority, but the total cost of the loan will have a lasting effect on your finances, so look for the cheapest loan, the one with the lowest cost. annual percentage rate.
Most online lenders offer pre-qualificationwhich allows you to preview your rate and term without impacting your credit score.
Check the monthly payments: Evaluate the impact of the monthly loan payments on your budget to determine if you can comfortably pay it back on time.
Use a personal loan calculator to see how much you can borrow and what rate and term you’ll need to make it affordable.
Consider funding velocity: If you need funds urgently, consider a lender that offers fast financing. Although some lenders offer overnight financing, most loans can be funded within a week of your application.
Online lenders often disclose the timeline in an FAQ or blog section of their websites, so you’ll know what to expect before you apply.
Gather the required documents – including W-2 forms, pay stubs and bank account statements – before you go. apply for a loanand quickly answer follow-up questions from the lender to move the application process forward.
How to get an emergency loan with bad credit
A bad credit score (below 630 FICO) does not automatically prevent you from obtaining a loan, but your score is a factor that weighs the most on a loan application.
Add a co-signer or co-borrower
Addition of a co-signer or co-borrower can increase your chances of qualifying or getting a good rate. A co-borrower has equal access to funds, while a co-signer does not. If you cannot repay your loan, the co-signer or co-borrower is responsible for the loan.
Add a guarantee
Some lenders offer secured personal loans, which allows borrowers to add collateral to the loan and can help borrowers with bad credit qualify. If you are unable to make the payments, the lender can take the security.
Turn to a checkout
Try your bank
If you are a Bank of America or US Bank customer, you may be able to get one of their small dollar loans. Bank of America balance assistance offers up to $500 for a fixed amount of $5. A simple loan from US Bank can be up to $1,000, and the loan carries a fee of $6 for every $100 borrowed. Both are repaid in three monthly installments.
Emergency Loan Alternatives
Cheaper alternatives borrowing is not always quick or convenient, and sometimes requires asking for help. But NerdWallet strongly recommends exhausting the alternatives first, even in an emergency. Here are some possible alternatives to an emergency loan.
Emergency loans to avoid
Payday loans are short-term, high-cost loans. Even in an emergency, they are a risky option. Payday lenders charge fees that can amount to 400% APRs, don’t check your credit score, and may not confirm your ability to repay the loan.
But they ask for access to your bank account or a blank check to withdraw the money you owe on your next payday. Borrowers who are not ready to repay the loan by then often borrow again, causing them to fall into a cycle of debt.
Car title loans
With a car title loan, a lender assesses the value of your vehicle and offers to lend you a percentage of that amount. If you agree, the lender retains title to the car and you receive your loan.
The lender generally does not examine your ability to repay the loan and may charge annual interest rates of 200% to 300%. These loans are risky because the lender holds title to your car. If you can’t pay, he’ll take your car.
Pawnbrokers may have lower APRs than payday loans and car title loans, but the risk is similar to car title loans: rates over 100% and the possibility of losing something that you enjoy.
With a pawnbroker, you hand over a valuable item to a pawnbroker, they assess its value, and grant you a loan based on that assessment. You have to pay it back, with interest, or they’ll keep your item.
If you manage to repay the loan but it takes up too much of your bank account, you might end up borrowing from the pawnshop again.
Installment loans without credit check
Beware of online lenders who market themselves as low-cost alternatives to payday loans, but don’t check your credit. Some installment loans no credit check share similarities with payday loans and auto loans, including exorbitant interest rates and additional fees that make the loan less affordable than it seems.
Capital Asset Fund is a no credit check lender that offers lower rates, but loans are only available in a handful of states.
Tips for building an emergency fund
Once your emergency is over, build a emergency fund to avoid taking out high cost loans in the future.
Here are some tips for getting started with an emergency fund:
Set a savings goal. Most financial experts recommend saving between three and six months of living expenses. Starting with a goal of saving at least $500 can usually cover small emergency expenses like minor car repairs.
Automate savings. Automatically transfer a small amount – maybe $10 or $20 to start – into a separate savings account. That way it’s out of sight, out of mind, but there when you need it.
Find an app to help you save. Some apps will round your spending account transactions to the nearest dollar and deposit the change into a savings account. It’s like a jar of spare change on your phone.
Store the bargains. The last thing you want to do with birthday money is save it, but one way to start your emergency savings is to set aside money that isn’t already planned, like small work bonuses, gifts and tax refunds.