What is an emergency loan?
An emergency loan is a personal loan that you can use to pay a medical bill, get a car repaired, or cover other urgent expenses. These loans can be secured or unsecured – unsecured loans are more common – and may come from an online lender, credit union, or some banks.
Check the lender’s requirements to see if you meet them. Lenders usually have a minimum credit rating and a maximum income debt. Some offer co-signed or joint loan options that may be easier to qualify for.
Look for a lender who can fund your loan quickly (the fastest funding is usually on the day your application is approved or the day after) and a lender who can provide the loan amount you want.
Why We Chose These Lenders
These lenders offer small personal loans and finance them quickly. Their credit requirements vary, but borrowers with fair or poor credit (below 690 FICO) may qualify.
upstart is an online credit platform that, in addition to credit and income information, also takes into account alternative data about an application, including your place of residence and school attendance. The company says it finances 99% of the loans within one business day of approval.
Best egg says it takes minutes to apply and, in some cases, loans fund one business day after approval. Although the lender approves applicants with fair credit, the average credit score is 700, which is good on the FICO scale.
OneMain offers personal loans to borrowers with low creditworthiness, but with high APR and a commitment fee. The lender can quickly fund loans by check, but you will need to go to a branch to complete the process.
Universal creditThe low minimum credit score makes it a great choice for borrowers with or without credit. The lender’s average five day funding time is longer than others, but if you can wait, you get access to loan building tools like credit monitoring and a credit score simulator.
Avant has a low minimum credit rating and says it can fund a loan in one business day after approval. It is annual percentage rate includes an administration fee of up to 4.75%. The company reports payments to the three major credit bureaus – Experian, Equifax, and TransUnion – who can help you build credit.
LendingPoint Loans to borrowers with low creditworthiness and low existing debt. The company says it can fund a loan on the business day after approval, but in some cases it could take longer.
Oportun offers borrowers with little or no credit history small installment loans at interest rates that are high compared to other lenders with poor creditworthiness. It operates in only a few states and sometimes finances loans within hours, whether you apply online or in person.
How to choose an emergency loan
Compare total costs: Speed may be your priority, but the total cost of the loan will have a profound effect on your finances. So look for the cheapest loan – the one with the lowest annual percentage that includes both the interest rate and fees.
Most online lenders offer this Pre-qualificationthat includes a gentle credit check and lets you preview your rate and term without affecting your creditworthiness.
Check the monthly payments: Consider how the monthly installments of the loan will affect your budget to see if you can comfortably pay it on time.
Use one Personal loan calculator to see how much you can borrow and what interest rates and terms you need to make it affordable.
Conveyor speed: If you are in dire need of cash, consider a lender who offers quick funding. While some lenders offer same-day funding, typical funding times are two to seven days.
Online lenders often post the timeline in an FAQ or blog section on their websites so that you know what to expect before you apply.
Gather required documents – including W-2s, pay slips, and bank statements – before you go apply for a loan, and promptly answer the lender’s questions to expedite the application process.
How to get an emergency loan if you have a bad credit rating
Bad credit (below 630 FICO) does not automatically exclude you from borrowing, but your rating is one of the factors that lenders weight most when applying for a loan.
Add a co-signer or co-debtor
Adding a Co-signer or co-debtor can improve your chances of getting a qualification or a good loan rate. A co-borrower has equal access to the funds, a co-signer does not. If you cannot make the loan payments, the co-signer or co-borrower is responsible for the loan.
Some lenders offer this secured personal loanswhich allows borrowers to add collateral to the loan and can help borrowers with poor credit scores qualify. If you fail to make payments, the lender can take the collateral.
Contact a credit union
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’s Balance Assist offers up to $ 500 for a flat rate of $ 5. Simple US bank loan can be $ 100 to $ 1,000, and the loan has a fee of $ 12 to $ 15. Both are repaid in three monthly installments.
Alternatives to the emergency loan
Cheaper alternatives Borrowing is not always quick or convenient and sometimes it is necessary to seek help. But NerdWallet strongly recommends exploring alternatives first, even in an emergency. Here are some possible alternatives to an emergency loan.
Avoid emergency loans
Payday loans are short term loans with high costs. Even in an emergency, they are a risky option. Payday lenders charge fees equivalent to an APR of 400% and do not verify your creditworthiness and may not confirm your ability to repay the loan.
However, they do require access to your bank account or a blank check to withdraw the money you owe the next payday. Borrowers who are not ready to repay the loan by then often take out new loans and thus get into a debt cycle.
With a car loan, a lender evaluates the value of your vehicle and offers to lend you a percentage of that amount. If you agree, the lender will keep the title of the car and you will receive your loan.
The lender does not usually verify your ability to repay the loan and may charge an annual percentage rate of 200% to 300%. These loans are risky as the lender owns the title of your car. If you can’t pay, it will take your car.
Pawn loans can have lower APR than payday and auto title loans, but the risk is similar to auto title loans: interest rates above 100% and the possibility of losing something you treasure.
With a pawnbrokerage, you hand over an item of value to a pawnshop who assesses its value and grants you a loan on this basis. They have to pay it back with interest or they keep your item.
If you manage to pay back the loan but your bank account gets too busy, you could end up going back to the pawn shop.
Installment loan without credit check
Be wary of online lenders positioning themselves as low-cost alternatives to payday loans, but don’t check your creditworthiness. Some Installment loan without credit check Have similarities with payday and auto title loans, including sky high interest rates and additional fees that make the loan less affordable than initially thought.
Lenders like Rise and OppLoans offer emergency loans with longer terms, but their interest rates are still high. Do not consider these lenders until you have ruled out lower cost alternatives.
Capital goods fund is another no credit check lender that offers lower interest rates but is only available in a handful of states.
Tips for building an emergency fund
Once your emergency is over, build in Emergency fund in order not to be able to take out expensive loans in the future.
Here are a few tips to get you started with an emergency fund:
Set yourself a savings goal. Most financial experts recommend saving on the cost of living between three and six months. If you start out with the goal of saving at least $ 500, you can usually cover small emergency expenses like minor car repairs.
Automate savings. Automatically transfer a small amount – maybe $ 10 or $ 20 to start with – to a separate savings account. That way, it’s out of sight, out of mind, but there when you need it.
There is an app for that. Some Apps will round up your expenses in the account to the nearest dollar and deposit the change into a savings account. It’s like a change jar on your phone.
Drop it off. The last thing you want to do with birthday money is save, but one way to start your emergency savings is to put away money that hasn’t been talked about, like small work bonuses, gifts, and tax refunds.